A rapid, unexpected increase in the inflation rate could make real interest rates negative.

Name: A rapid, unexpected increase in the inflation rate could make real interest rates negative.
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Question

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If inflation increases rapidly, nominal interest rates may not increase at the same pace, thus making real interest rates (nominal interest rates – inflation rate) negative. This means that the inflation rate is higher than the return on investment, leading to a loss of purchasing power for investors.

A Rapid, Unexpected Increase in the Inflation Rate Could Make