Low Interest Rates Create Economic Distortions, Especially When Real, Inflation-Adjusted

question 94

True/False

Low interest rates create economic distortions, especially when real, inflation-adjusted interest rates are positive.

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Definitions:

Normal Good

A product whose demand increases when income rises and decreases when income falls, under the assumption that all other factors remain constant.

Domestic Price

The price of a good or service within a country, influenced by local demand and supply conditions, taxes, and costs of production.

Trade Price

The price at which goods are sold between companies before they reach the final consumer, often lower than the retail price.

Normal Good

A normal good is a type of good for which demand increases when income increases, and falls when income decreases but price remains constant.