If the Nominal Interest Rate Was 12 Percent and the Inflation

question 75

Multiple Choice

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980,while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2011,then

• A)real rates were higher in 2011.
• B)real rates were higher in 1980.
• C)credit was more expensive in 1980.
• D)credit was cheaper in 2011 because the nominal rate was lower.

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