From 1972 to 1974, the expected real interest rate on short-term bonds averaged about +2 percent, but the realized real interest rate averaged about ?2 percent. The main reason for the difference was that
A. actual inflation was about 4 percentage points lower than expected inflation.
B. actual inflation was about 4 percentage points higher than expected inflation.
C. a monopoly cornered the market on short-term bonds.
D. nominal rate of interest was zero.
Answer: B
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