The natural rate of interest is the real interest rate:
A) at which the demand for goods and services equals the natural rate of output.
B) that most people anticipate based on their expectations of inflation.
C) at which the natural rate of unemployment equals the natural rate of output.
D) equal to the nominal interest rate minus the natural rate of inflation.

Question

Quizplus · Accepted Answer

The natural rate of interest is defined as the real interest rate at which the demand for goods and services equals the natural rate of output, meaning the economy is in equilibrium without inflationary or deflationary pressures.

The Natural Rate of Interest Is the Real Interest Rate