During the first few years of the Great Depression:
A) both nominal and real interest rates remained constant.
B) nominal interest rates increased, but real interest rates decreased.
C) nominal interest rates decreased, but real interest rates increased.
D) both nominal and real interest rates increased.
E) both nominal and real interest rates decreased.

Question

Quizplus · Accepted Answer

During the Great Depression, there was a general decline in prices, which means that the purchasing power of money increased. As a result, even though nominal interest rates decreased, the real interest rates increased.

During the First Few Years of the Great Depression