For a Given Nominal Interest Rate, an Unexpectedly Low Inflation

question 88

Multiple Choice

For a given nominal interest rate, an unexpectedly low inflation rate ________ the real interest rate.

• A)increases
• B)decreases
• C)has no impact on
• D)may either increase or decrease

---

Definitions:

Predictability

The ability to accurately forecast the outcome of a process or the occurrence of an event based on current knowledge or past experience.

Normal Distribution

A probability distribution that is symmetric around the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Human Traits

Characteristics or qualities that define individual human beings, ranging from physical properties to personality attributes.

Intelligence

The ability to acquire and apply knowledge and skills, including reasoning, problem-solving, and adapting to new situations.