"If the inflation rate is positive, then the real interest rate is greater than the nominal interest rate." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
The statement is incorrect. The nominal interest rate equals the real interest rate plus the inflation rate. Therefore, if the inflation rate is positive, the nominal interest rate is greater than the real interest rate.
Economics
You might also like to view...
What is the proper sequence of the phases of a business cycle?
A) peak, contraction, trough, expansion, recovery B) peak, contraction, recovery, trough, expansion C) peak, contraction, trough, recovery, expansion D) contraction, peak, trough, recovery, expansion E) recovery, trough, peak, expansion, contraction
Economics
Figure 10-3
In Figure 10-3, the perfectly competitive firm is realizing a
a.
loss equal to ABCE.
b.
profit equal to ABCE.
c.
profit equal to ABDF.
d.
loss equal to ABDF.
Economics