The Fisher Effect tells us that the true nominal rate is actually made up of three components.These three components are ________.
A)the nominal rate,the real rate,and the inflation rate
B)the real rate,the inflation rate,and the product of the real rate and the nominal rate
C)the real rate,the inflation rate,and the product of the real rate and inflation
D)the real rate and the product of the real rate and inflation

Question

Quizplus · Accepted Answer

The Fisher Effect describes the relationship between nominal interest rates, real interest rates, and inflation, stating that the nominal interest rate is approximately equal to the sum of the real interest rate and the inflation rate, plus the product of the real interest rate and the inflation rate.

The Fisher Effect Tells Us That the True Nominal Rate