According to the Fisher Hypothesis, If the Real Interest Rate

question 54

Multiple Choice

According to the Fisher hypothesis, if the real interest rate is 2 percent and the inflation rate falls from 3 percent to 1 percent, then the nominal interest rate will_____percentage points and the real interest rate will decline by______ percentage points.

• A)decline by 0; 2
• B)increase by 2; 2
• C)increase by 0; 0
• D)decline by 2; 0 percentage points and the real interest rate will decline by

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Definitions:

State Law

consists of the laws and regulations enacted by the legislative bodies of individual states.

Passed Through

A term often used in finance and taxation to describe income, losses, or tax benefits transferred from one entity to another, such as in a pass-through entity.

Limited Liability Company

A business configuration that combines the beneficial limited liability of a corporation with the pass-through taxation system of partnerships or sole proprietorships.

Taxes

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.