Suppose That the Nominal Interest Rate and Expected Inflation Both

question 46

Multiple Choice

Suppose that the nominal interest rate and expected inflation both increase by 2%.Given this information,we would expect which of the following to occur?

• A)a reduction in the real interest rate
• B)an increase in the real interest rate
• C)an increase in investment
• D)a reduction in money demand
• E)both A and C

---

Definitions:

African-American Judges

Members of the judiciary who are of African descent and serve in various judicial capacities within the legal system of the United States.

Secretary of State

A senior official of the federal government, responsible for the foreign affairs of the country.

Welfare Benefits

Financial aid provided by the government to individuals or groups in need.

Upper-Middle-Class

A social group characterized by high income, education, and social status, typically above the middle class but below the upper class.