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What difference does this simplification make

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Reference no: EM132384050

Consider the Fischer Effect as represented by the Fischer Equation:

1 + RNOMINAL = (1 + RREAL)(1 + Inflation)

RNOMINAL = (1 + RREAL)(1 + Inflation) - 1

And sometimes it is simplified to:

RNOMINAL = (RREAL) + (Inflation)

What difference does this simplification make, and is it significant?

Reference no: EM132384050

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