Real and nominal rates of interest Notice that Equation 6.1 can be rewritten this way: = (1+r*) (1 + r) r (1+1) where ris the nominal interest rate, r* is the real interest rate, and i is the expected inflation rate. In this equation there are three separate terms in parenthesis. a. Which term represents the growth in money that an investment provides? b. Which term represents the growth in an investor's purchasing power? c. Which term represents the growth in prices in the economy