The Fisher Effect involves which of the items below?
A) Nominal rate, the bond rate, and inflation
B) Nominal rate and the real rate only
C) Nominal rate and inflation only
D) Nominal rate, the real rate, and inflation

Question

Quizplus · Accepted Answer

The Fisher Effect is based on the relationship between nominal interest rates, real interest rates, and inflation. It states that real interest rates equal nominal interest rates minus expected inflation. Therefore, the Fisher Effect involves the nominal rate, the real rate, and inflation.

The Fisher Effect Involves Which of the Items Below