If inflation was zero percent, nominal interest rates would be:
A) equal to real interest rate.
B) larger than real interest.
C) smaller than real interest.
D) at the optimal rate.

Question

Quizplus · Accepted Answer

If inflation was zero percent, nominal interest rates would be equal to real interest rates because there would be no adjustment necessary to account for inflation.

If Inflation Was Zero Percent, Nominal Interest Rates Would Be