Two factors that influence the nominal risk-free rate are;
A) The relative ease or tightness in capital markets and the expected rate of inflation.
B) The expected rate of inflation and the set of investment opportunities available in the economy.
C) The relative ease or tightness in capital markets and the set of investment opportunities available in the economy.
D) Time preference for income consumption and the relative ease or tightness in capital markets.
E) Time preference for income consumption and the set of investment opportunities available in the economy.

Question

Quizplus · Accepted Answer

The nominal risk-free rate is influenced by the relative ease or tightness in capital markets, which affects the supply and demand for loanable funds, and the expected rate of inflation, which affects the real return on investments.

Two Factors That Influence the Nominal Risk-Free Rate Are;