If the rate of inflation increases from 3% to 6%, we would most likely expect that...
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If the rate of inflation increases from 3% to 6%, we would most likely expect that |
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Homework Answers
Answer
Option 4
nominal interest rates will increase by 3% and the real interest rate will remain the same
Nominal interest rate =real interest rate + inflation
change in inflation =6-3=3%
so the inflation increases by 3% which increases nominal interest rate by 3%
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