A Change in the Expected Rate of Inflation from 3

question 187

Multiple Choice

A change in the expected rate of inflation from 3 percent to 5 percent will

• A)increase the real interest rate by 2 percentage points.
• B)decrease the real interest rate by 3 percentage points.
• C)increase the nominal interest rate by 2 percentage points.
• D)decrease the nominal interest rate by 2 percentage points.

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Definitions:

Working Memory

Another term for short-term memory.

Short-term Memory

The part of memory where small amounts of information can be held for a short period of time, typically a few seconds to a minute.

Semantic Memory

General knowledge, as opposed to episodic memory.

Thalamus

An area near the center of the brain involved in the relay of sensory information to the cortex and in the functions of sleep and attention.