If We Look at Real and Nominal Interest Rates in Australia

question 3

Multiple Choice

If we look at real and nominal interest rates in Australia since 1971, we see that

• A) the difference between the nominal and real interest rates widened during the 1990s because of inflation.
• B) both the nominal and real interest rates were negative in the highly inflationary 1970s.
• C) the nominal interest rate has always been less than the real interest rate because of inflation.
• D) at times the nominal interest rate has been greater than the real interest rate and at times has been less than it.
• E) the real interest rate has almost always been less than the nominal interest rate because of inflation.

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