For a Given Real Interest Rate, Which of the Following

question 129

Multiple Choice

For a given real interest rate, which of the following best describes the effects of an increase in inflation?

• A)Inflation makes the real interest rate decrease, which encourages savings.
• B)Inflation makes the real interest rate decrease, which discourages savings.
• C)Inflation makes the real interest rate increase, which encourages savings.
• D)Inflation makes the real interest rate increase, which discourages savings.

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