During periods of deflation, the real interest rate will be lower than the nominal interest rate.

Name: During periods of deflation, the real interest rate will be lower than the nominal interest rate.
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Question

During periods of deflation, the real interest rate will be lower than the nominal interest rate.​

Quizplus · Accepted Answer

During periods of deflation, the real interest rate is higher than the nominal interest rate because deflation increases the purchasing power of money over time, effectively increasing the real return on investments compared to the nominal rate.

During Periods of Deflation, the Real Interest Rate Will Be