The ______ states that a country's nominal interest rate is the sum of the required 'real' rate of interest and the expected rate of inflation over the period for which the funds are to be lent.
A)PPP theory
B)efficient market theory
C)Sora Effect
D)Fisher Effect

Question

Quizplus · Accepted Answer

The statement described in the question is known as the Fisher Effect. The PPP theory refers to purchasing power parity, the efficient market theory relates to the idea that market prices reflect all available information, and the Sora Effect is not a recognized economic theory.

The ______ States That a Country's Nominal Interest Rate Is