The Monetary Approach to Interest Rates Assumes That the Prices

question 15

Multiple Choice

The monetary approach to interest rates assumes that the prices of goods are ________, which implies that a country's currency will ________, when nominal interest rates ________ because of ________ expected future inflation.

• A) perfectly flexible; depreciate; increase; higher
• B) perfectly flexible; appreciate; increase; higher
• C) immutable; depreciate; increase; higher
• D) immutable; appreciate; decrease; higher
• E) absolutely inflexible; depreciate; decrease; higher

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