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The difference between the nominal interest rate and real interest rate is that real interest rate is the inflation adjusted interest rate. Real interest rate is equal to nominal interest rate minus inflation rate. On the other hand, nominal interest rate is the interest rate before the adjustment of inflation. For example, if nominal interest rate is 8% and the inflation rate is 6% then real interest rate will be 8 - 6 = 2%. Real interest can be negative while nominal interest rate is always positive. Real interest rate will be negative when inflation rate is greater than the nominal interest rate.
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