From 1972 to 1974, the Expected Real Interest Rate on Short-Term

question 19

Multiple Choice

From 1972 to 1974, the expected real interest rate on short-term bonds averaged about +2 percent, but the realized real interest rate averaged about −2 percent.The main reason for the difference was that

• A)actual inflation was about 4 percentage points lower than expected inflation.
• B)actual inflation was about 4 percentage points higher than expected inflation.
• C)a monopoly cornered the market on short-term bonds.
• D)nominal rate of interest was zero.

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Definitions:

Antoninus Pius

Roman Emperor from 138 to 161 AD, known for his peaceful reign and significant contributions to the architectural landscape of Rome, including the construction of temples and public works.

Triumphal March

A type of ceremonial music or a segment within a larger work designed to commemorate victory or celebration, often marked by a grand and uplifting character.

Sarcophagi

Stone coffins typically adorned with sculptures or inscriptions and used to bury the dead, especially in ancient civilizations such as Egypt, Rome, and Greece.

Augustus

The first Roman emperor, ruling from 27 BC until his death in AD 14, known for initiating the Pax Romana and significant cultural and political reforms.