Which of the Following Statements Is Correct

question 220

Multiple Choice

Which of the following statements is correct?

• A)For a given real interest rate, the nominal interest must decrease if expected inflation increases.
• B)For a given nominal interest rate, the real interest will decrease if inflation decreases.
• C)For a given expected inflation rate, the nominal interest must increase if real interest decreases.
• D)For a given real interest rate, the nominal interest must increase if expected inflation increases.

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Definitions:

Capital Formation

The process of accumulating assets and investments that are used for future production or economic growth.

World Bank

An international monetary organization granting loans and finances to governments of less affluent countries for capital project undertakings.

Developing Nations

Countries with lower levels of industrialization, lower standards of living, and lower Human Development Index (HDI) scores compared to more developed countries.

Labor Productivity

The output of goods and services produced per unit of labor input, often used as an indicator of economic efficiency.