<P> Letting r denote the real interest rate, i denote the nominal interest rate, and let π denote the inflation rate, the Fisher equation is: </P> <Dl> <Dd> i ≈ r + π (\ displaystyle i \ approx r+ \ pi) </Dd> </Dl> <Dd> i ≈ r + π (\ displaystyle i \ approx r+ \ pi) </Dd> <P> This is a linear approximation, but as here, it is often written as an equality: </P>

Explain what these terms mean in fisher's theory of interest rates