Suppose That the Nominal Interest Rate and Expected Inflation Both

question 76

Multiple Choice

Suppose that the nominal interest rate and expected inflation both decrease by 2%.Given this information,we would expect which of the following to occur?

• A)an increase in the real interest rate
• B)a reduction in the real interest rate
• C)a reduction in investment
• D)an increase in money demand
• E) both A and C

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Definitions:

Birthrates

are statistical measures showing the number of live births per 1,000 people in a population over a given period of time, reflecting fertility trends.

Peripheral Countries

Refers to nations that are on the margins of the global economy, often characterized by lower levels of industrialization, weaker state institutions, and greater dependence on core countries.

World Systems Theory

A sociological perspective that emphasizes the economic and political interconnectedness and dependency of countries globally, often classifying them into core, semi-peripheral, and peripheral nations.

Colonization

The act of establishing control over indigenous people of an area and exploiting it economically.