If a country had deflation of 2 percent while the nominal interest rate increased by 1...
If a country had deflation of 2 percent while the nominal interest rate increased by 1 percentage point, how would the real interest rate change?
a. The real interest rate would increase by 1 percentage point.
b. The real interest rate would increase by 3 percentage points.
c. The real interest rate would decrease by 3 percentage points.
d. The real interest rate would decrease by 1 percentage point.
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