The nominal interest
A)will never be negative.
B)can be negative if inflation is unexpected.
C)can be negative if the inflation rate is greater than the nominal interest rate.
D)can be negative if deflation occurs.
E) can be negative when the real interest rate is negative.

Question

Quizplus · Accepted Answer

Nominal interest rates are typically set by financial institutions and do not directly become negative. Negative interest rates are a relatively modern concept primarily associated with real interest rates, where the effect of inflation is considered. Nominal rates are the stated rates without adjusting for inflation.

The Nominal Interest