Other Things Equal, the Equation for the Real Interest Rate

question 13

Multiple Choice

Other things equal, the equation for the real interest rate indicates that:

• A)as inflation increases, the real interest rate will rise.
• B)as inflation increases, the nominal interest rate will fall.
• C)as inflation decreases, real income will fall.
• D)as inflation decreases, the real interest rate will rise.
• E)as inflation changes, the real interest rate will not change.

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