The effect of monetary inflation on interest rates would be: to cause rates to initially fall, but as prices rise, interest rates will also rise. to cause rates to initially rise, but as prices fall, interest rates will also fall. to cause rates to initially fall, and as prices rise, interest rates will also fall much more rapidly. to cause rates to initially fall, and as prices rise, interest rates will stay the same.

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Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter20: Monetary Policy

Section: Chapter Questions

Problem 6SQ

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The effect of monetary inflation on interest rates would be:

		to cause rates to initially fall, but as prices rise, interest rates will also rise.
		to cause rates to initially rise, but as prices fall, interest rates will also fall.
		to cause rates to initially fall, and as prices rise, interest rates will also fall much more rapidly.
		to cause rates to initially fall, and as prices rise, interest rates will stay the same.

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