Suppose That the Nominal Rate of Interest Is Holding Steady

question 178

Multiple Choice

Suppose that the nominal rate of interest is holding steady at 8 percent even as the anticipated rate of inflation rises. What is happening to the real rate of interest?

• A) It is unchanged.
• B) It is increasing.
• C) It is decreasing.
• D) It equals the nominal interest rate.

---

Definitions:

Gestalt Psychology

The school of psychology that emphasizes the tendency to organize perceptions into wholes and to integrate separate stimuli into meaningful patterns.

Insight

The sudden realization of a problem's solution; often considered a key component in creativity.

Psycholinguistic Theory

A framework that studies how psychological factors, including cognition, emotion, and social relationships, influence language learning and use.

Language Acquisition

The process by which humans acquire the capacity to perceive, produce, and use words to understand and communicate.