We should expect a country that experiences volatile inflation to also have:
A) volatile nominal interest rates.
B) volatile real interest rates but stable nominal rates.
C) stable nominal interest rates.
D) volatile real interest rates.

Question

Quizplus · Accepted Answer

Inflation and nominal interest rates are positively correlated, meaning that when inflation is high, nominal interest rates tend to be high as well. Therefore, a country experiencing volatile inflation is likely to also experience volatile nominal interest rates.

We Should Expect a Country That Experiences Volatile Inflation to Also