Lower inflation over the long run tends to be associated with

Question

Quizplus · Accepted Answer

Lower inflation leads to lower nominal interest rates because lenders do not need to charge as high of a premium to compensate for inflation risk. Higher real interest rates (adjusted for inflation) are generally associated with lower inflation, but this is not a direct result of lower inflation itself. There is no clear relationship between lower inflation and government spending, international trade, or taxation.

Lower Inflation Over the Long Run Tends to Be Associated