Analysis based on the Fisher effect uses the _____ inflation rate rather than the _____ inflation rate because borrowing and lending are:
A) current; expected; future-oriented activities.
B) expected; current; future-oriented activities.
C) current; expected; currently taken actions.
D) expected; current; currently taken actions.

Question

Quizplus · Accepted Answer

The Fisher effect uses the expected inflation rate rather than the current inflation rate because borrowing and lending are future-oriented activities, meaning decisions are based on expectations of future inflation rather than current levels.

Analysis Based on the Fisher Effect Uses the _____ Inflation