Suppose that the nominal rate of interest is 7% and the expected inflation rate is 3%. According to the fisher equation, the: A) real interest rate will be 3 B) real interest rate will be nominal interest rate plus expected inflation. C) real interest rate will be 8 D) real interest rate will not change

Suppose that the nominal rate of interest is 7% and the expected inflation rate is 3%. According to the fisher equation, the: A) real interest rate will be 3 B) real interest rate will be nominal interest rate plus expected inflation. C) real interest rate will be 8 D) real interest rate will not change

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 10SQ

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Economics

Suppose that the nominal rate of interest is 7% and the expected inflation rate is 3%. According to the fisher equation, the:

real interest rate will be 3

real interest rate will be nominal interest rate plus expected inflation.

real interest rate will be 8

real interest rate will not change

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