Historically, Why Have High Inflation Rates Tended to Be Associated

question 104

Multiple Choice

Historically, why have high inflation rates tended to be associated with high nominal interest rates?

• A)Growth in investment and savings is encouraged when consumers are judged to be overspending.
• B)High inflation leads to a decrease in purchasing power and thus increases the attractiveness of investment over consumption in the short term.
• C)The real interest rate needs to be high enough so that individuals can expect their savings to have greater purchasing power in the future than in the present.
• D)Individuals will spend more when they expect their investments to increase in value.

---

Definitions:

Continuous Improvement

Involves always searching for new ways to improve operations quality and performance.

Quality Control

Checks processes, materials, products and services to ensure that they meet high standards.

High Standards

The requirement or expectation for excellence and superior performance in a particular activity or field.

Internal Customers

Employees or departments within an organization that rely on other parts of the organization for products or services.