During a deflationary period
A) the nominal interest rate is less than the real interest rate.
B) the real interest rate is less than the nominal interest rate.
C) the nominal interest rate does not change.
D) the price level rises.
A
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Suppose the price of butter falls because milk price supports are removed. Will people’s tastes shift away from margarine and toward butter?
What will be an ideal response?
In 1963, the tax rate for those individuals earning in the highest income tax bracket was 91 percent
a. True b. False
If the Federal Reserve unexpectedly raised its interest rate target, which of the following would most likely occur?
a. The interest rate would increase and bond prices would rise. b. The interest rate would decrease and bond prices would rise. c. The interest rate would increase and bond prices would fall. d. The interest rate would decrease and bond prices would fall. e. The interest rate would increase but bond prices would not change.
When the money market is drawn with the value of money on the vertical axis, if the price level is above the equilibrium level, there is an
a. excess demand for money, so the price level will rise. b. excess demand for money, so the price level will fall. c. excess supply of money, so the price level will rise. d. excess supply of money, so the price level will fall.