In the early 1980s, inflation rates soared, pushing up , as explained by the .
A)nominal interest rates; Fisher equation
B)real interest rates; Friedman hypothesis
C)unemployment; Phillips curve
D)mortgage rates; real estate reaction function

Question

Quizplus · Accepted Answer

The Fisher equation relates nominal interest rates to inflation rates and real interest rates. As inflation rates soared in the early 1980s, it would push up nominal interest rates. Therefore, the correct choice is A) nominal interest rates; Fisher equation.

In the Early 1980s, Inflation Rates Soared, Pushing Up