According to the Quantity Theory and the Fisher Equation, If

question 94

Multiple Choice

According to the quantity theory and the Fisher equation, if the money growth increases by 3 percent and the real interest rate equals 2 percent, then the nominal interest rate will increase:

• A) 2 percent.
• B) 3 percent.
• C) 5 percent.
• D) 6 percent.

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Definitions:

Independent Variable

In scientific research, the variable that is manipulated or changed by the researcher to observe its effects on the dependent variable.

Correlation Coefficient

A numerical index of the degree of relationship that exists between two variables.

Strength

The quality or state of being physically strong, as well as a person's mental or emotional ability to deal with difficult situations.

Direction

Guidance or instructions on how to proceed; or, the course along which something moves.