The nominal interest rate will be less than the real interest rate when A. the rate of inflation is positive but decreasing. B. the real interest rate is negative. C. the rate of inflation is negative (that is, deflation) D. the rate of inflation is positive and increasing.

The nominal interest rate will be less than the real interest rate when A. the rate of inflation is positive but decreasing. B. the real interest rate is negative. C. the rate of inflation is negative (that is, deflation) D. the rate of inflation is positive and increasing.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 13P

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Question

The nominal interest rate will be less than the real interest rate when

the rate of inflation is positive but decreasing.

the real interest rate is negative.

the rate of inflation is negative (that is, deflation)

the rate of inflation is positive and increasing.

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