According to the Quantity theory of money and the Fisher effect, if the central bank increases the rate of money growth. a. inflation and the nominal interest rate both increase. b. inflation and the real interest rate both increase. c. the nominal interest rate and the real interest rate both increase. d. inflation, the real interest rate, and the nominal interest rate all increase.

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Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509
BuyFind

Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509

Solutions

Chapter 17, Problem 5CQQ
Textbook Problem

According to the Quantity theory of money and the Fisher effect, if the central bank increases the rate of money growth.

a. inflation and the nominal interest rate both increase.

b. inflation and the real interest rate both increase.

c. the nominal interest rate and the real interest rate both increase.

d. inflation, the real interest rate, and the nominal interest rate all increase.

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