Refer to Figure 14.4 below,which shows the inflation rate and ten-year bond yield,for the following questions.
-For most of 2008,
A)real interest rate was negative.
B)the ten-year bonds nominal interest rate was less than the real interest rate.
C)real interest rate was zero.
D)real interest rate was positive.
E)not enough information

Question

Refer to Figure 14.4 below,which shows the inflation rate and ten-year bond yield,for the following questions. 
-For most of 2008,
A)real interest rate was negative. 
B)the ten-year bonds nominal interest rate was less than the real interest rate. 
C)real interest rate was zero. 
D)real interest rate was positive. 
E)not enough information

Quizplus · Accepted Answer

During most of 2008, the real interest rate was negative due to the nominal interest rates being low and inflation being relatively high, especially during the financial crisis.