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People Know That the Inflation Rate Will Decrease from 7

Question 85

Multiple Choice

People know that the inflation rate will decrease from 7 per cent to 3 per cent. As a result


A) the nominal interest rate equals 3 per cent.
B) the nominal interest rate falls by 4 percentage points.
C) the nominal interest rate rises by 4 percentage points.
D) the nominal interest rate is constant.

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