The Following Figure Shows the Inflation Rate and Ten-Year Bond

Multiple Choice

The following figure shows the inflation rate and ten-year bond yield. Refer to this figure when answering
Figure 14.4: Inflation and 10-Year Bond Yields
-Consider Figure 14.4 above. Between 2006 and 2007 the:

A) real interest rate was negative
B) 10-year-bonds' nominal interest rate was lower than inflation
C) real interest rate was higher than nominal interest rate
D) real interest rate was positive
E) None of these answers are correct.