The Fisher equation states that the
A) expected real interest rate minus the expected inflation rate equals the nominal interest rate.
B) expected inflation rate plus the nominal interest rate equals the expected real interest rate.
C) nominal interest rate equals the expected real interest rate plus the expected inflation rate.
D) expected real interest rate equals the expected inflation rate minus the nominal interest rate.
C
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The demand for cat food decreases while the supply increases. The equilibrium price of cat food ________, and the equilibrium quantity ________
A) does not change; increases B) rises; decreases C) falls; perhaps changes but we can't say if it increases, decreases, or stays the same D) rises; perhaps changes but we can't say if it increases, decreases, or stays the same E) falls; increases
Over a particular price range, if the quantity effect of a price decrease is larger than the price effect, it implies that:
A) demand is inelastic in the price range. B) demand is elastic in the price range. C) the demand curve is vertical in the price range. D) the demand curve is upward sloping in the price range.