Under the Assumptions of the Fisher Effect and Monetary Neutrality,if

question 140

Multiple Choice

Under the assumptions of the Fisher effect and monetary neutrality,if the money supply growth rate falls,then

• A)both the nominal and the real interest rate fall.
• B)neither the nominal nor the real interest rate fall.
• C)the nominal interest rate falls,but the real interest rate does not.
• D)the real interest rate falls,but the nominal interest rate does not.

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Definitions:

Accounting Principles

The rules and guidelines that businesses follow to report financial information consistently and accurately.

Private Sector

The part of the economy that is owned and operated by individuals and companies for profit, and is not controlled by the state.

Financial Accounting Standards Board

An independent organization responsible for establishing and improving financial accounting standards in the United States.

Economic Entity Assumption

A fundamental principle in accounting that separates the transactions of a business from those of its owners or other businesses.