The ________ interest is the relevant interest rate in the money market; the __________ interest rate is the relevant interest rate in the loanable funds market.
A)Nominal; nominal.
B)Nominal; real
C)Real; nominal
D)Real; real

Question

The ________ interest is the relevant interest rate in the money market; the __________ interest rate is the relevant interest rate in the loanable funds market.​
A)​Nominal; nominal.
B)​Nominal; real
C)​Real; nominal
D)​Real; real

Quizplus · Accepted Answer

The nominal interest rate is the rate observed in the money market, where short-term loans and securities are traded. The real interest rate, adjusted for inflation, is more relevant in the loanable funds market, which deals with longer-term loans and investments.

The ________ Interest Is the Relevant Interest Rate in the Money