If the Rate of Inflation Is Zero, Prices Are Expected

question 82

Multiple Choice

If the rate of inflation is zero, prices are expected to remain stable, and the nominal rate of interest is 5 percent, then the

• A) real rate of interest is equal to the nominal rate.
• B) real rate of interest is less than the nominal rate.
• C) nominal rate is greater than the real rate of interest.
• D) investment demand schedule will shift upward.

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Definitions:

Carbonyl Compound

Organic compounds that contain a carbonyl group, characterized by a carbon atom double-bonded to an oxygen atom, and including ketones, aldehydes, carboxylic acids, esters, and amides.

3-Hexanol

An organic compound characterized by a six-carbon chain with a hydroxyl group bonded to the third carbon atom.

Benzyl Bromide

An organic compound consisting of a benzene ring bonded to a -CH2Br group, utilized commonly as a reagent in organic synthesis.

1-Phenyl-2-octanol

A chemical compound featuring a phenyl group attached to the second carbon of an eight-carbon alcohol chain, utilized in fragrance formulations.