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If the Rate of Inflation Is -2 Percent, the Output

Question 54

Multiple Choice

If the rate of inflation is -2 percent, the output gap is -5 percent, the nominal interest rate is 5 percent, and the unemployment rate is 8 percent, what is the real interest rate?


A) 10 percent
B) 0 percent
C) -3 percent
D) 7 percent
E) 3 percent

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