The long-run effect of a decrease in the growth rate of the quantity of money is a
A) lower real interest rate.
B) higher real interest rate.
C) lower nominal interest rate.
D) higher nominal interest rate.
E) higher inflation rate.

Question

Quizplus · Accepted Answer

A decrease in the growth rate of the quantity of money typically leads to lower inflation, which in turn results in a lower nominal interest rate in the long run.

The Long-Run Effect of a Decrease in the Growth Rate