Real Risk-Free Rate of Interest, r*

That interest rate which equalizes the aggregate supply of, and demand for, riskless securities in an economy with zero inflation.  The real risk-free rate could also be called the pure rate of interest since it is the rate of interest that would exist on very short-term, default-free U.S. Treasury securities if the expected rate of inflation were zero.
Have more questions? Submit a request


Please sign in to leave a comment.
Powered by Zendesk