Suppose You Are Told That the Nominal Interest Rate Is

question 46

Multiple Choice

Suppose you are told that the nominal interest rate is greater than the real interest rate. Given this information, we would be able to conclude that:

• A) expected inflation must be positive.
• B) either the nominal or real interest rate must be negative.
• C) expected inflation must be negative.
• D) deflation must be occurring.
• E) both the nominal and real interest rates must be negative.

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