An Increase in Expected Inflation for Any Given Nominal Interest

question 45

Multiple Choice

An increase in expected inflation for any given nominal interest rate will cause the:

• A) bond supply curve to shift to the left.
• B) bond demand curve to shift to the right.
• C) price of bonds to decrease.
• D) price of bonds to increase.

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Definitions:

Freud

Sigmund Freud was an Austrian neurologist who founded the discipline of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

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The act of explaining the meaning of something; in psychology, it refers to the process of understanding or making sense of sensory information.

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A trained professional who treats mental health problems and emotional challenges through talking therapies and psychological treatments.