The Fed Cannot Achieve a Negative Real Interest Rate If

question 59

Multiple Choice

The Fed cannot achieve a negative real interest rate if the inflation rate is zero or negative because:

• A)the nominal interest rate cannot fall below zero.
• B)inflation doves will not permit a negative real interest rate.
• C)zero or negative values of inflation can not be accurately measured.
• D)inflationary expectations are not anchored when the inflation rate is zero.

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