Inflation Reached Its Peak (Of at Least 14 Percent)in the Late

question 167

Multiple Choice

Inflation reached its peak (of at least 14 percent) in the late 1970s to the early 1980s.If this statement is true,then

• A) it is certain the real rate of interest was greater than the nominal rate.
• B) it is certain the nominal rate of interest was greater than the real rate.
• C) borrowers would borrow more because,automatically,real rates would fall.
• D) the real rate of interest must have been constant,even if the nominal rate varied because of consumption smoothing.
• E) if higher nominal rates were charged,it would be certain that higher real rates would be received.

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Definitions:

American Morale

The spirit, attitude, and confidence of the American people or military forces, often discussed in the context of historical events or conflicts.

Trenton

The capital city of New Jersey, United States, known historically for its crucial role in the American Revolutionary War.

Princeton

A historic town in New Jersey, known for Princeton University, one of the oldest and most prestigious universities in the United States.

Treaty of Paris

The 1783 agreement that ended the American Revolutionary War and recognized American independence from Britain.