If the Rate of Inflation Is Zero, Prices Are Expected

question 82

Multiple Choice

If the rate of inflation is zero, prices are expected to remain stable, and the nominal rate of interest is 5 percent, then the

• A) real rate of interest is equal to the nominal rate.
• B) real rate of interest is less than the nominal rate.
• C) nominal rate is greater than the real rate of interest.
• D) investment demand schedule will shift upward.

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