The Long-Run Effect of an Increase in the Growth Rate

question 50

Multiple Choice

The long-run effect of an increase in the growth rate of the quantity of money is a

• A) lower real interest rate.
• B) higher real interest rate.
• C) lower nominal interest rate.
• D) higher nominal interest rate.
• E) lower inflation rate.

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Definitions:

Bank Interest

The amount paid to depositors for holding their money in a bank account, or the amount charged to borrowers for taking out a loan.

Annual Payments

Recurring payments made once a year, often related to loans, insurance premiums, or obligations.

Term Loan

A loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate.

Annual Payments

Regular payments made once a year, often used in the context of loans, leases, or annuities.