If Expected Inflation Is Constant and the Nominal Interest Rate

question 37

Multiple Choice

If expected inflation is constant and the nominal interest rate increases by 3.5 percentage points, then the real interest rate

• A)increases by 3.5 percentage points.
• B)increases, but by less than 3.5 percentage points.
• C)decreases, but by less than 3.5 percentage points.
• D)decreases by 3.5 percentage points.

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Definitions:

Creative Blocks

A condition where an individual is unable to access their creativity, leading to difficulty in producing new work.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior.

Rational-emotive Therapy

A form of cognitive-behavioral therapy founded by Albert Ellis that helps individuals identify and change irrational beliefs that cause emotional distress.

Paradoxical Intervention

A therapeutic technique in which a therapist prescribes or suggests the continuation of the behavior symptomatic of the client's issue, often leading to change through resistance to the suggestion.