A real value or rate is adjusted to remove the effects of inflation, while a nominal value or rate includes inflation. For instance, if a bank offers you a loan with a stated 8% interest rate, this represents a nominal rate. The real rate can be found by deducting the inflation rate. Suppose that you are borrowing $100 for one year, with an 8% nominal interest rate in an economy with 3% inflation. The real interest rate you pay is 5% (8%-3%). At the end of the year, you must repay $108 ($100*1.08), which is worth $105 after subtracting inflation. Another interpretation is that real values correspond to purchasing power, while nominal values indicate purchasing power plus inflation.