If the expected rate of inflation is zero,the
A)real interest rate must also equal zero.
B)money (nominal)interest rate must also equal zero.
C)real interest rate must equal the money interest rate.
D)economy is likely to experience high inflation in the near future.

Question

Quizplus · Accepted Answer

When the expected rate of inflation is zero, the real interest rate equals the nominal interest rate because there is no inflation to adjust for.

If the Expected Rate of Inflation Is Zero,the