If the Inflation Rate Falls and Nominal Interest Rates Are

question 51

Multiple Choice

If the inflation rate falls and nominal interest rates are unchanged,

• A) inflation will fall.
• B) inflation will continue at the same rate.
• C) real interest rates rise.
• D) real interest rates are unaffected.
• E) real interest rates fall.

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Definitions:

Deficit Spending

The practice of spending more money than is received in revenue, typically referring to government spending that exceeds its receipts.

Opportunity Cost

The expense incurred by not selecting the second best choice while making a decision or opting among alternatives.

Debt Default

The failure to meet the legal obligations of a loan, such as not making scheduled payments on time.

U.S. Federal Budget

The government's estimate of revenue and spending for a fiscal year that is proposed by the President and approved by Congress.