LEARNING OBJECTIVES
After you have read this section, you should be able to answer the following questions:
What is the difference between nominal interest rates and real interest rates?
What is the yield curve?
What is the Fisher equation?
We have now discussed how you could use your $100 to buy goods and services or the money of another country. You can also use your money to buy money in the future. When we say this, we are simply describing a familiar transaction in an unfamiliar way: we are talking about saving. If you put money in a bank, then you are buying money in the future with money you give up today. When you save in this way, you become a participant in the credit markets (or loan markets).
Toolkit: Section 16.4 "The Credit (Loan) Market (Macro)"
A credit market (or loan market) brings together suppliers of credit, such as households who are saving, and demanders of credit, such as businesses and households who need to borrow. You can review the credit market in the toolkit.
- 1368 reads
