Determine if the following statement is true or false: When bond prices rise, the interest rates fall. When the Federal Reserve lowers the nominal interest rate to zero, the real interest rate is zero. (a) True (b) False. The Federal Reserve tends to take...
A. the interest rate measured in terms of goods. B. always less than the real interest rate. C. equal to the real interest rate minus the rate of inflation. D. the type of interest rate typically reported in the financial pages of newspapers. E. equal to the expected rate of inflation...
With respect to the IS-LM model, in an LM curve the real interest rate is: A. positively related to real income, holding the real money supply constant. B. held constant, resulting in excess savings being positively related to real income. C. negatively related to real income, holding ...
6.If the nominal interest rate is 8% and rate of inflation is 2%, the real interest rate is() a.16%.b.10%.c.6%.d.4%. 7.What is the purpose of measuring the overall level of prices in the economy?( ) a.to allow consumers to know what kinds of prices to expect in the futur...
The empirical results of this study show that the US real rate of interest is an important factor in explaining variations of real rates in Britain and the Netherlands but not vice versa.doi:10.1080/135048598354113MonadjemiMehdiTaylor & Francis GroupApplied Economics Letters...
If country A's real interest rate increases, country A's short-run capital inflow will increase. How about its long-run capital inflow? Will it increase or decrease? Foreign Exchange Market: The foreign exchange market is a market for international...
A. inflation is expected to exceed the nominal interest rate in the future、 B. inflation is expected to be less than the nominal interest rate in the future、 C. actual inflation was less than the nominal interest rate、 D. actual inflation was greater than the nominal interest rate、 ...
A. Nominal interest rates decrease when inflation rates increase. B. The exchange rate is equal to the market exchange rate. C. A rise in the real interest rate will lead to a depreciation of currency. D. As nominal foreign interest rates increase, the forward exchange rate in units of th...
The Fisher equation, otherwise known as the Fisher effect, explains how the real interest rate is affected by inflation. The equation states that inflation rate decreases the real rates.Answer and Explanation: The Fisher equation is given by:...
Whilereal interest ratescan be effectively negative if inflation exceeds the nominal interest rate, the nominal interest rate is, theoretically, bounded by zero. This means thatnegative interestrates are often the result of a desperate and critical effort to boost economic growth through financial means...