Which of the following is a valid representation of the Fisher effect?
A) i = E(INF) + iR
B) iR = E(INF) + i
C) E(INF) = i + iR
D) none of the above

Name: Which of the following is a valid representation of the Fisher effect? A) i = E(INF) + iR B) iR = E(INF) + i C) E(INF) = i + iR D) none of the above
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Question

Quizplus · Accepted Answer

The Fisher effect states that the nominal interest rate (i) is equal to the real interest rate (iR) plus the expected inflation rate (E(INF)).

Which of the Following Is a Valid Representation of the Fisher