If the real interest rate was stable over time, this would suggest that there is ____ relationship between inflation and nominal interest rate movements.
A)a positive
B)an inverse
C)no
D)an uncertain (cannot be determined from information above)

Question

Quizplus · Accepted Answer

A stable real interest rate implies that changes in the nominal interest rate are directly related to changes in inflation, indicating a positive relationship as described by the Fisher equation.

If the Real Interest Rate Was Stable Over Time, This