Figure 4.4

-In Figure 4.4,the most likely cause of the increase in the equilibrium interest rate from i? to i? is a(n)________ in the ________.
A) increase; expected inflation rate
B) decrease; expected inflation rate
C) increase; government budget deficit
D) decrease; government budget deficit

Question

Figure 4.4
 
-In Figure 4.4,the most likely cause of the increase in the equilibrium interest rate from i? to i? is a(n)________ in the ________.
A) increase; expected inflation rate 
B) decrease; expected inflation rate 
C) increase; government budget deficit 
D) decrease; government budget deficit

Quizplus · Accepted Answer

An increase in expected inflation rate would cause an increase in the equilibrium interest rate to compensate for the decrease in purchasing power of the money lent or invested.

Figure 4.4 -In Figure 4.4,the Most Likely Cause of the Increase in of the Increase