The short-run impact on the nominal interest rate of monetary expansion is different from its long-run impact. Which of the following explanations is not correct? a. In the short run, nominal interest rate falls due to Fisher effect. b. Over time, rising income pushes up nominal interest rate via increased demand for money. c. Over time, expected inflation rate rises, which in turn pushes up nominal interest rate. d. Over time, rising prices also push up nominal interest rate. e. All of the above are correct
The short-run impact on the nominal interest rate of monetary expansion is different from its long-run impact. Which of the following explanations is not correct? a. In the short run, nominal interest rate falls due to Fisher effect. b. Over time, rising income pushes up nominal interest rate via increased demand for money. c. Over time, expected inflation rate rises, which in turn pushes up nominal interest rate. d. Over time, rising prices also push up nominal interest rate. e. All of the above are correct
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter33: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 7PA
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The short-run impact on the nominal interest rate of monetary expansion is different
from its long-run impact. Which of the following explanations is not correct?
a. In the short run, nominal interest rate falls due to Fisher effect.
b. Over time, rising income pushes up nominal interest rate via increased demand for
money.
c. Over time, expected inflation rate rises, which in turn pushes up nominal interest rate.
d. Over time, rising prices also push up nominal interest rate.
e. All of the above are correct
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