During the 1990s, Japan experienced periods of deflation and very low nominal interest rates, approaching zero percent. Why would lenders of money agree to a nominal interest rate of almost zero?
What will be an ideal response?
With the deflation, the real interest rate exceeded the nominal interest rate. Lenders were making their decisions based on the higher real interest rate, not the very low nominal interest rate.
Economics
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Although Coca-Cola and PepsiCo are major players in the soft drink industry, the large number of other competing firms means that the industry is most accurately characterized as monopolistically competitive
Indicate whether the statement is true or false
Economics
Which of the following is most likely to lead to demand-side inflation?
A. An increase in government spending B. A decrease in taxes C. An increase in the money supply D. All of these responses are correct.
Economics