When Expected Inflation Decreases for Any Given Nominal Interest Rate

question 72

Multiple Choice

When expected inflation decreases for any given nominal interest rate, all of the following occur except the:

• A) real interest rate decreases.
• B) bond supply curve shifts to the left.
• C) cost of borrowing increases and the desire to borrow decreases.
• D) price of bonds increases.

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Definitions:

Lac Operon

A set of genes involved in the metabolism of lactose in bacteria, along with their promoter and operator sequences that control their expression.

Repressor Protein

A type of protein that binds to specific DNA sequences and inhibits the expression of a gene by blocking RNA polymerase.

Feedback Inhibition

A type of enzyme regulation in which the accumulation of the product of a reaction inhibits an earlier reaction in the sequence; also known as end product inhibition.

Enzyme Activity

The measure of the rate at which an enzyme catalyzes a reaction, converting substrate molecules into products.