Because of _____, real interest rates were _____ than the nominal rates, early in the Great Depression.
A) inflation, higher
B) inflation, lower
C) deflation, higher
D) deflation, lower

Question

Quizplus · Accepted Answer

During the Great Depression, deflation was prevalent, which means the general level of prices was decreasing. When deflation occurs, the real interest rate (which adjusts the nominal rate for inflation) becomes higher than the nominal rate because the value of money increases over time.

Because of _____, Real Interest Rates Were _____ Than the Nominal

Because of _, Real Interest Rates Were _ Than the Nominal