What assumption results in investment depending only on the nominal interest rate?
A) rationality
B) zero expected inflation
C) uncertainty
D) The MPC is less than 1.

Question

Quizplus · Accepted Answer

If there is zero expected inflation, then the nominal interest rate and real interest rate will be the same. Therefore, investment decisions will depend only on the nominal interest rate.

What Assumption Results in Investment Depending Only on the Nominal