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:

Diathesis-Stress Perspective

A psychological theory that explains behavior as a result of predispositional vulnerabilities together with stress from life experiences.

Systems Theory

A theory proposing that multiple interacting factors generate all behaviour, and that the effects of these factors are bidirectional; that is, the influence of each factor on another changes the other factors, which in turn then influence the original factor. The overall effect of these influences is said to be greater than the sum of the influence of each of the factors.

Biopsychosocial Model

A holistic approach to health and illness that considers biological, psychological, and social factors.