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Inflations rates do very from year to year and currency to currency. The dollar bill has no value today in terms of purchasing power with the increasing of prices.
Interest rates are a percentage rewarded received by lenders in deferring consumption of resources until a future date. The interest rate measures the price borrowers pay to have resources now...
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The interest rate measures the price borrowers pay to have resources now. The magnitude of interest rates is determined by five factors, 1) Where supply and demand interact and the willingness to save,2)People willingness to lend money depending on the rate of inflation,3)The riskiness of the borrower which means people would loan money to a bank or government because of its guaranteed then to their own relatives, 4)The tax treatment of the interest –interest received can be taxable in most cases and free of taxes in some cases,5)The term of the loan...
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