Hyperinflation causes:
A) nominal interest rates to fall, leading to unproductive investment decisions by firms.
B) real interest rates to fluctuate, leading to uncertainty in investment decisions.
C) nominal interest rates to rise, but leaves the real interest rate constant.
D) nominal interest rates to fluctuate, leading to lower nominal wages.

Question

Quizplus · Accepted Answer

Hyperinflation causes real interest rates to fluctuate due to the rapid increase in prices, leading to uncertainty in investment decisions as firms and investors cannot accurately predict future costs and returns.

Hyperinflation Causes