If a Country Had Deflation of 2 Percent While the Nominal

question 140

Multiple Choice

If a country had deflation of 2 percent while the nominal interest rate increased by 1 percentage point,how would the real interest rate change?

• A) The real interest rate would decrease by 1 percentage point.
• B) The real interest rate would increase by 1 percentage point.
• C) The real interest rate would decrease by 3 percentage points.
• D) The real interest rate would increase by 3 percentage points.

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Definitions:

Physical Distance

The measure of space between two objects or places, often affecting social interactions and perceptions.

Mindlessness

A mental state characterized by a lack of conscious awareness or reflexive use of memorized behavior and thought patterns, often leading to errors or oversight in tasks.

Compliance

The act of conforming to or following rules, standards, or laws, or yielding to a request or desire from others.

Obedience

Following orders or directives from an authority figure without questioning.