Investopedia Video: Interest Rates (Nominal and Real)

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Interest rates are the primary yardstick for measuring how much return lenders will get. However, the stated interest rate on a loan, sometimes called the nominal rate, doesn't tell the whole story.
Because of inflation, the purchasing power of every dollar lent out to an individual or a business tends to decrease over time. Lenders take this into account by calculating what's known as the real interest rate.
For more on Interest Rates, check out;
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Managing Interest Rate Risk
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How Interest Rates Affect The Stock Market
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The real interest rate is not exactly nominal interest rate minus inflation rate but in the case inflation is low it approximates real interest rate very well.