Historical analysis of real interest rates in the United States shows that
A)real interest rates were unusually low in both the 1970s and 1980s.
B)real interest rates were unusually high in both the 1970s and 1980s.
C)real interest rates were unusually low in the 1970s and unusually high in the 1980s.
D)real interest rates were unusually low in the 1980s, spurring the economic growth that occurred during the Reagan administration.

Question

Quizplus · Accepted Answer

Historical analysis shows that real interest rates were unusually low in the 1970s due to high inflation rates, but rose significantly in the 1980s as inflation was curbed by tight monetary policy. Therefore, real interest rates were unusually low in the 1970s and unusually high in the 1980s.

Historical Analysis of Real Interest Rates in the United States