According to the Fisher Equation, If the Expected Inflation Rate

question 58

Multiple Choice

According to the Fisher equation, if the expected inflation rate is less than the actual inflation rate, then the actual interest rate will be

• A) lower than the equilibrium interest rate.
• B) higher than the equilibrium interest rate.
• C) the same as the equilibrium interest rate.
• D) higher or lower than the equilibrium interest rate, depending on the degree of money illusion.

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