Multiple Choice
People expect an inflation rate of 5 percent and the real interest rate is positive. Consequently the nominal interest rate will be
A) more than 5 percent.
B) 5 percent.
C) less than 5 percent.
D) Without more information it is impossible to tell if the nominal interest rate will be more than, less than, or equal to 5 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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