If Inflation Does Not Adjust Rapidly in the Short Run

question 31

Multiple Choice

If inflation does not adjust rapidly in the short run, then when the Federal Reserve decreases the nominal interest rate, the real interest rate in the short run will:

• A)increase.
• B)decrease.
• C)not change.
• D)be determined by saving and investment decisions.

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Definitions:

Shifting Meaning

A logical fallacy that occurs when the meaning of a term or phrase changes in the course of an argument.

Straw Man

A fallacy where an opponent's argument is misrepresented to be easily attacked or refuted.

Diversion

A tactic used in argumentation to distract from the main issue by shifting attention to an unrelated subject.

Ignorance

Ignorance is the state of being unaware, uninformed, or lacking knowledge about something specific or in general.