Unexpected Disinflation Will Cause the Real Interest Rate to Be

question 137

True/False

Unexpected disinflation will cause the real interest rate to be greater than the equilibrium rate,which will benefit lenders and harm borrowers.

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Definitions:

Hybrid Cars

Vehicles powered by a combination of an internal combustion engine and one or more electric motors, using less fuel than conventional cars.

Normal Good

A type of good for which demand increases as the income of the consumer increases, showing a direct relationship between income and demand.

Income Elasticity

A measure of how much the demand for a good responds to a change in consumers' income.

Total Revenue

The total income generated by a firm from the sale of goods or services before any costs or expenses are subtracted.