For a Given Nominal Interest Rate, an Increase in Deflation

question 137

Multiple Choice

For a given nominal interest rate, an increase in deflation will cause the real rate of interest to:

• A) remain relatively constant.
• B) increase.
• C) decrease.
• D) become unpredictable.

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Definitions:

Price Controls

Government-imposed limits on the prices charged for goods and services in a market, aimed at maintaining affordability or preventing inflation.

Hurricane

A powerful tropical cyclone with heavy rain and strong winds, originating over warm ocean waters and potentially causing significant damage upon landfall.

Availability

The state of being able to be used or obtained, typically referring to goods, services, or resources.