If the nominal interest rate is higher than the real interest rate,then inflation must be:
A)zero.
B)higher than the nominal rate of interest.
C)lower than the nominal rate of interest.
D)negative.

Question

Quizplus · Accepted Answer

The difference between the nominal interest rate and the real interest rate is the inflation rate. Therefore, if the nominal rate is higher than the real rate, then inflation must be lower than the nominal rate of interest.

If the Nominal Interest Rate Is Higher Than the Real