Suppose That a Change in the Expected Inflation Rate Leads

question 5

Multiple Choice

Suppose that a change in the expected inflation rate leads supply and demand to adjust so that the after-tax expected real interest rate is unchanged at 2.0 percent.The tax rate is 30 percent.Initially, the expected inflation rate is 3.0 percent.If the expected inflation rate rises from 3 percent to 6 percent, the nominal interest rate

• A)rises by 3 percent.
• B)rises by 4.25 percent.
• C)falls by 4.25 percent.
• D)falls by 3 percent.

---

Definitions:

Accomplishments

Achievements or completed goals that demonstrate success or progress.

Service Manager

A professional responsible for coordinating and managing the delivery of services in businesses and organisations.

Nurture

The practice of nurturing and supporting the advancement or progression of an individual or entity.

Personality Traits

Enduring characteristics and habitual patterns of behavior, thought, and emotion that are relatively stable over time.