The real interest rate ________ inflation ________.
A)is unaffected in the long run by;because of the classical dichotomy
B)moves one for one with expected;in the long run
C)always increases with;but because of the Fisher effect lower expected inflation ensues
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

In the long run, the real interest rate is unaffected by inflation due to the classical dichotomy, which separates real and nominal variables.

The Real Interest Rate ________ Inflation ________

The Real Interest Rate Inflation