During the 1970s,Canada experienced an unusual pattern of interest rates.What happened during this period?
A)The nominal interest rate was less than the real interest rate.
B)The inflation rate was negative,implying a real interest rate that was higher than the nominal interest rate.
C)The inflation rate exceeded the nominal interest rate,implying a negative real interest rate.
D)The inflation rate was negative,implying a nominal interest rate higher than the real interest rate.
E)The nominal and real interest rates were equal to each other.

Question

Quizplus · Accepted Answer

During the 1970s, Canada, like many other countries, experienced high inflation rates. This period of high inflation often led to situations where the inflation rate exceeded the nominal interest rate, resulting in a negative real interest rate. This means that the money lent out would lose value over time when adjusted for inflation, making the real return on loans and savings negative.

During the 1970s,Canada Experienced an Unusual Pattern of Interest Rates