In most countries, the nominal interest rate is _____ than the real interest rate because inflation is:
A) higher; positive.
B) higher; negative.
C) lower; positive.
D) lower; negative.

Question

Quizplus · Accepted Answer

The nominal interest rate is typically higher than the real interest rate in most countries because inflation is positive. The nominal interest rate includes the real interest rate plus the expected inflation rate, thus when inflation is positive, it increases the nominal interest rate above the real rate.

In Most Countries, the Nominal Interest Rate Is _____ Than