The real interest rate is actually the ex ante real interest rate because it is adjusted for ________ changes in the price level.
A) actual
B) expected
C) nominal
D) real

Question

Quizplus · Accepted Answer

The ex ante real interest rate is adjusted for expected changes in the price level, not actual changes that have already occurred. The nominal interest rate, on the other hand, is not adjusted for changes in the price level at all. The real interest rate is adjusted for changes in the price level based on actual inflation, but this question specifically refers to the ex ante real interest rate.

The Real Interest Rate Is Actually the Ex Ante Real