Answer the following questions true (T) or false (F)
1. The nominal interest rate plus the inflation rate equals the real interest rate.
2. If inflation expectations are increasing, we would expect that the nominal interest rate would also be increasing, holding all else constant.
3. The nominal interest rate minus the inflation rate equals the real interest rate.
1. FALSE
2. TRUE
3. TRUE
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"If the marginal social benefit of a car exceeds the marginal social cost of a car, we are producing too many cars." True or false? Explain
Indicate whether the statement is true or false
If the public believes the commitment to a nominal anchor to be credible, the effect of a negative aggregate demand shock is for ________
A) short-run aggregate supply to shift up B) short-run aggregate supply to be unaffected C) short-run aggregate supply to shift down D) inflation, but not economic activity, to decrease