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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Definitions:

Medulla Oblongata

The lower portion of the brainstem controlling vital functions such as heartbeat and breathing.

Spinal Cord

The cylindrical bundle of nerve fibers and associated tissue that is connected to the brain and lies within the vertebral canal.

Thecal Sac

The protective membrane surrounding the spinal cord and nerve roots.

Spinal Cord

The primary conduit for communication between the brain and the peripheral nervous system.