According to the Fisher equation, the nominal interest rate equals the expected inflation rate:
A) less the equilibrium real interest rate.
B) plus the equilibrium real interest rate.
C) multiplied by the equilibrium real interest rate.
D) divided by the equilibrium real interest rate.

Question

Quizplus · Accepted Answer

According to the Fisher equation, the nominal interest rate equals the expected inflation rate plus the equilibrium real interest rate. This can be expressed as i = r + π, where i is the nominal interest rate, r is the equilibrium real interest rate, and π is the expected inflation rate.

According to the Fisher Equation, the Nominal Interest Rate Equals