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What is the distinction between the nominal interest rate and the real interest rate? Which is a better indicator of incentives to borrow and lend?

What is the distinction between the nominal interest rate and the real interest rate? Which is a better indicator of incentives to borrow and lend? What is the real interest rate if the nominal interest rate is 8% and the expected inflation rate is 10% over the course of a year? (2 points)

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