If the rate of inflation equals zero then the nominal rate of interest:
A)equals zero.
B)equals the real rate of interest.
C)can be negative.
D)equals the target interest rate.

Name: If the rate of inflation equals zero then the nominal rate of interest: A)equals zero. B)equals the real rate of interest. C)can be negative. D)equals the target interest rate.
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Question

Quizplus · Accepted Answer

When the rate of inflation is zero, the nominal rate of interest equals the real rate of interest because there is no inflation to adjust for.

If the Rate of Inflation Equals Zero Then the Nominal