Which statement best describes the correlation between nominal and real interest rates?

Question

Quizplus · Accepted Answer

Nominal interest rates reflect the inflation rate, while real interest rates adjust for inflation. Therefore, if inflation is high, nominal interest rates will also be high but real interest rates will be lower. On the other hand, if inflation is low, nominal interest rates may be low but real interest rates will be higher. This means that nominal and real interest rates often do not move together.

Which Statement Best Describes the Correlation Between Nominal and Real