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People Know That the Inflation Rate Will Increase from 3

Question 58

Multiple Choice

People know that the inflation rate will increase from 3 percent to 5 percent. As a result


A) the nominal interest rate is constant.
B) the nominal interest rate falls by 2 percentage points.
C) the real interest rate rises by 2 percentage points.
D) the nominal interest rate rises by 2 percentage points.

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