The Nominal Interest Rate

Multiple Choice

The nominal interest rate:

A) varies directly with the rate of expected inflation in an economy.
B) is the interest rate expressed in dollars of constant purchasing power.
C) equals the difference between the real interest rate and the inflation rate.
D) is the basis for decisions taken by the lenders and the borrowers in an economy.
E) is the percentage increase in the average price level from one year to the next.