The Fisher Equation Implies That If Expected Inflation Is Higher

question 31

Multiple Choice

The Fisher equation implies that if expected inflation is higher than actual inflation,then:

• A) the real interest rate will be equal to the equilibrium interest rate.
• B) the real interest rate will be greater than the equilibrium interest rate.
• C) the real interest rate will be less than the equilibrium interest rate.
• D) both the real interest rate and equilibrium interest rate will become undetermined.

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