If the Nominal Interest Rate Is Greater Than the Real

question 32

Multiple Choice

If the nominal interest rate is greater than the real interest rate,

• A) it is an indication of economic growth.
• B) the real interest rate must be negative.
• C) inflation must be occurring.
• D) lenders must lose because they can only make loans using the real interest rate.
• E) None of the above answers is correct because it is not possible for the nominal interest rate to exceed the real interest rate.

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Definitions:

Control

The capacity to affect how people act or the progression of occurrences.

Control Group

In experimental research, the group of subjects that does not receive the treatment being tested, serving as a benchmark for measuring the effect of that treatment.

Experimental

Pertaining to or based on experiments, which are structured and controlled tests or investigations to establish or test a hypothesis.

Placebo

An inert or non-effective substance or treatment given to a participant in a study, used to contrast with an active substance to test its efficacy.