An unexpected change in nominal interest rate changes real interest rate by ____ in the short run.
A)a smaller amount
B)a larger amount
C)the same amount
D)an indeterminate percent

Question

An unexpected change in nominal interest rate changes real interest rate by ____ in the short run.​
A)​a smaller amount
B)​a larger amount
C)​the same amount
D)​an indeterminate percent

Quizplus · Accepted Answer

In the short run, an unexpected change in the nominal interest rate changes the real interest rate by the same amount because inflation expectations do not adjust immediately.

An Unexpected Change in Nominal Interest Rate Changes Real Interest