When Nominal Interest Rates Are Above Zero, the MP Curve

question 6

Multiple Choice

When nominal interest rates are above zero, the MP curve has a ________ slope because when the inflation rate increases the monetary authorities will ________ the real interest rate.

• A) negative; raise
• B) negative; lower
• C) positive; raise
• D) positive; lower

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Definitions:

Music

An art form consisting of sound and silence, organized in time, often combining vocal or instrumental sounds for emotional expression, entertainment, or ceremonial purposes.

Cause of Action

A set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party.

Proximate Cause

A legal term referring to an event sufficiently related to an injury that the courts deem the event to be the cause of that injury.

Negligence

The lack of appropriate care that a sensible person would have provided in comparable circumstances, leading to injury or detriment.