Suppose People Expect There to Be a Substantial Increase in the Rate

question 70

Multiple Choice

Suppose people expect there to be a substantial increase in the rate of inflation over the next few years. Which of the following would you predict?

• A)An increase in the real interest rate and a decrease in the nominal interest rate
• B)No increase or decrease in the nominal and real interest rates
• C)A constant nominal interest rate and a higher real interest rate
• D)A higher nominal interest rate
• E)A decline in the nominal interest rate

---

Definitions:

Trust

The belief in the reliability, truth, ability, or strength of someone or something, foundational to social interactions and relationships.

Aversive Conditioning

A behavior-modification technique that involves teaching the individual to associate an undesirable behavior with an unpleasant stimulus.

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior, encouraging or discouraging certain behaviors.

Compulsive Habit

A behavior pattern that is repeated excessively and automatically, often without the individual's conscious intention.