If Expected Inflation Is Constant and the Nominal Interest Rate

question 37

Multiple Choice

If expected inflation is constant and the nominal interest rate increases by 3.5 percentage points, then the real interest rate

• A)increases by 3.5 percentage points.
• B)increases, but by less than 3.5 percentage points.
• C)decreases, but by less than 3.5 percentage points.
• D)decreases by 3.5 percentage points.

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Definitions:

Organizational Behavior Modification

A method of applying principles of behavioral psychology to change individual or group behaviors within an organization.

Financial Reinforcement

Using monetary rewards or penalties to influence behavior in an organization or system.

Nonfinancial Reinforcement

Motivational strategies that do not involve monetary rewards but rather recognition, feedback, and opportunities for growth.

Social Reinforcement

Using positive or negative social cues, like approval or disapproval, to influence and modify behavior.