Considering the data on real and nominal interest rates for the U.S.from 1979 to 2006, which of the following statements is most accurate?
A)The real interest rate remains unchanged over time
B)There have been times when the real interest rate has been negative
C)Nominal interest rates higher in 2000 than they had been at any other point in time
D)The inflation rate is always greater than the real interest rate

Question

Quizplus · Accepted Answer

The data shows that there have been times when the nominal interest rate has been higher than the inflation rate, resulting in a negative real interest rate. This is evidenced by negative values in the real interest rate column. Option A is incorrect because the real interest rate does change over time. Option C is incorrect because there have been periods of high nominal interest rates before 2000. Option D is incorrect because there have been periods when the real interest rate was higher than the inflation rate.

Considering the Data on Real and Nominal Interest Rates for the U.S.from