Which of the following is true about the nominal and real interest rates?
A)Changes in the nominal interest rate are smoother than the real interest rate.
B)The real interest rate can be higher than the nominal interest rate.
C)The nominal and the real interest rates always move together.
D)The nominal interest rate is always positive,but the real interest rate can be negative.

Question

Quizplus · Accepted Answer

The nominal interest rate is typically positive because it represents the stated rate before adjusting for inflation, while the real interest rate can be negative if inflation exceeds the nominal rate.

Which of the Following Is True About the Nominal and Real