When the inflation rate is zero,the ________.

Question

Quizplus · Accepted Answer

When the inflation rate is zero, there is no difference between the real interest rate and the nominal interest rate as there is no inflation to adjust for. Therefore, option A is the correct answer. Options B and C are incorrect because they suggest changes in the supply and demand of loanable funds, which are not necessarily related to the inflation rate being zero. Option D is unlikely as interest rates are unlikely to be zero under normal economic conditions. Option E is incorrect as it combines two mutually exclusive options.

When the Inflation Rate Is Zero,the ________