Neo-Fisherism says
A)the central bank should increase inflation by raising the nominal interest rate.
B)the central bank should increase inflation by lowering the real interest rate.
C)the central bank should increase inflation by lowering nominal interest rates.
D)that Fisherism is wrong.
E)the central bank should increase inflation by lowering the money supply.

Question

Quizplus · Accepted Answer

Neo-Fisherism posits that higher nominal interest rates set by the central bank can lead to higher inflation, contrary to the traditional view that lower nominal rates stimulate inflation. This theory relies on the Fisher equation, which suggests a direct relationship between nominal interest rates and expected inflation.

Neo-Fisherism Says