Assume the long-term real interest rate is 4% and the expected inflation rate is 5%
If the Fed decreases the money supply and as a result, the expected inflation rate decreases to 2%, then based on the Fisher effect, the long-term real interest rate will ________ and the long-term nominal interest rate will ________. A) fall to 4%; rise to 7%
B) remain at 4%; fall to 6%
C) fall to 1%; fall to 6%
D) fall to 6%; remain at -1%
B
Economics
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Goods are ________ when the income elasticity of demand is less than zero
A) substitutes B) complements C) inferior D) elastic E) normal
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"An increase in the real interest rate increases the quantity of investment." Is the previous statement correct or incorrect?
What will be an ideal response?
Economics