People Know That the Inflation Rate Will Decrease from 7

question 161

Multiple Choice

People know that the inflation rate will decrease from 7 percent to 3 percent. As a result

• A) the nominal interest rate falls by 4 percentage points.
• B) the nominal interest rate is constant.
• C) the nominal interest rate rises by 4 percentage points.
• D) the nominal interest rate equals 3 percent.

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