If the Inflation Rate Increases

question 75

Multiple Choice

If the inflation rate increases,

• A) the velocity of circulation increases.
• B) potential GDP increases.
• C) real GDP growth increases.
• D) the nominal interest rate falls.
• E) the real interest rate rises.

---

Definitions:

Annual Income

The total earnings from work, investment, benefits, and other sources over the course of a year.

Future Values

The projected amount of money or value of an investment at a specified future date, accounting for factors like interest rates and returns.

Investment 1

The strategy of apportioning capital with the expectation of generating financial returns.

Compounded Quarterly

Describes the frequency with which interest is added to the principal balance of a loan or deposit four times a year, increasing the total amount of interest earned or paid.