The nominal interst rate?

1. Is not observed in the real world

2. Equals inflation rate minus the real interest rate

3. Equals the amount of expected inflation plus the real interest rate

4. Determines the real return on an investment.

5. Determines how high the actual inflation rate would be.

The nominal interst rate?

In finance and economics nominal interest rate or nominal rate of interest refers to the rate of interest before adjustment for inflation (in contrast with the real interest rate); or, for interest rates %26quot;as stated%26quot; without adjustment for the full effect of compounding (also referred to as the nominal annual rate). An interest rate is called nominal if the frequency of compounding (e.g. a month) is not identical to the basic time unit (normally a year).