Author Question: Suppose the nominal interest rate is 5 and the rate of inflation is 5. The real interest rate is ... (Read 117 times)

fahad · **on:** Jun 29, 2018

Suppose the nominal interest rate is 5 and the rate of inflation is 5. The real interest rate is therefore

A) 0.
B) 1.
C) 5.
D) 6.

Question 2

Suppose the Federal Reserve buys 50 million worth of securities from a commercial bank. As a result, the monetary base ________, and the quantity of money will ________ 50 million due to the ________.

A) increases; increase by more than; money multiplier
B) decreases; decrease by more than; money multiplier
C) increases; increase by more than; expenditure multiplier
D) decreases; decrease by less than; expenditure multiplier
E) increases; decrease by; currency drain