A Change in the Expected Rate of Inflation from 5

question 115

Multiple Choice

A change in the expected rate of inflation from 5 percent to 3 percent will

• A)decrease the real interest rate by 2 percentage points.
• B)decrease the real interest rate by 3 percentage points.
• C)increase the nominal interest rate by 2 percentage points.
• D)decrease the nominal interest rate by 2 percentage points.

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