An Increase in Expected Inflation Causes the Real Interest Rate

question 57

Multiple Choice

An increase in expected inflation causes the real interest rate to ________ and output to ________ in the short run,before prices adjust to restore equilibrium.

• A)rise; rise
• B)rise; fall
• C)fall; rise
• D)fall; fall

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Definitions:

Hospitalized

Admitted to a hospital for treatment, observation, or a medical procedure.

Serious Illness

A health condition that poses a significant risk to an individual’s life or long-term health, often requiring complex care and treatment.

Peptic Ulcers

Sores that develop on the inner lining of the stomach, small intestine, or esophagus, often resulting from infection with H. pylori or the long-term use of NSAIDs.

Helicobacter Pylori

A type of bacteria that infects the stomach lining and can lead to ulcers and sometimes stomach cancer.