The Fisher Effect Says That

question 236

Multiple Choice

The Fisher effect says that

• A)the nominal interest rate adjusts one for one with the inflation rate.
• B)the growth rate of the money supply is negatively related to the velocity of money.
• C)real variables are heavily influenced by the monetary system.
• D)All of the above are correct.

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Definitions:

Drive

A psychological state that, by creating arousal, motivates an organism to engage in a behavior to satisfy a need.

Stabilizes Conditions

Actions or interventions that make a situation or condition more steady and less likely to change.

Arousal

Physiological activation (such as increased brain activity) or increased autonomic responses (such as increased heart rate, sweating, or muscle tension).

Incentives

External objects or external goals, rather than internal drives, that motivate behaviors.