General Question

f4a's avatar

Don't you just hate it when you read something but you don't know how to use what you've read?

Asked by f4a (601points) June 30th, 2009

i’ve read the meaning of fisher hypothesis. but i couldn’t make sense out of it. im the kind of person who understand things when ive experienced it. so my question is how do you explain fisher hypothesis (fisher effect, is it the same thing?) in your daily lives, would you like or need to know it, and how could it affect you in your daily decision making if you know it?

why is it important that nominal interest rate moves with inflation and that real interest rate is steady?

Observing members: 0 Composing members: 0

6 Answers

TabernakAttack's avatar

Real interest rate= Nominal Interest Rate – Expected Inflation Rate
Nominal Interest Rate= Real interest Rate + Expected Inflation Rate

YARNLADY's avatar

Yes, that happens to me a lot, because I try to understand very difficult concepts. I find that researching several internet sites is a very effective way to find different interpretations and simplifications of the information.

walterallenhaxton's avatar

That is nonsense. That is why you can’t understand it. Interest is a price and it either moves with the market or it is price controlled. If things are not moving in a predictable way it is because of the information that is available to the players. There is much false information floating around as well as time specific information that no longer is valid. It is messy in the economic environment.

SecondGlance's avatar

”...why is it important that nominal interest rate moves with inflation and that real interest rate is steady?”

It isn’t important. Carry on with your life, all will be well.

YARNLADY's avatar

If you are going to pass a test on this subject, or enter the financial field, it is a good idea to have a grasp of the basic concepts. Often we don’t realize how our background and training is helping us in our daily life, because it is not in the actual details, but in the overall ability to solve problems.

f4a's avatar

yup i agree with yarnlady..

Answer this question




to answer.

This question is in the General Section. Responses must be helpful and on-topic.

Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
Knowledge Networking @ Fluther