Nominal interest rates tend to be higher in countries with
A)higher rates of inflation.
B)lower rates of inflation.
C)lower real interest rates.
D)Both B and C.

Question

Quizplus · Accepted Answer

Nominal interest rates include both the real interest rate and inflation. Therefore, countries with higher rates of inflation tend to have higher nominal interest rates to compensate for the decrease in purchasing power caused by inflation.

Nominal Interest Rates Tend to Be Higher in Countries with