An Increase in Expected Inflation for Any Given Nominal Interest

question 45

Multiple Choice

An increase in expected inflation for any given nominal interest rate will cause the:

• A) bond supply curve to shift to the left.
• B) bond demand curve to shift to the right.
• C) price of bonds to decrease.
• D) price of bonds to increase.

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Definitions:

Predictability

The extent to which future events or outcomes are known or can be forecasted, often based on analysis of available data or patterns.

Variable

Any factor, trait, or condition that can exist in differing amounts or types and can influence the outcome of scientific research or experiments.

Sampling Bias

A bias in which certain members of a population have a higher likelihood of being included in the sample over others, leading to a non-representative sample.

Generality

The quality or state of being widespread or universally applicable, often used to describe observations or theories that are considered to be true under numerous conditions and contexts.