Monetary policy authorities can affect real interest rates
A)in the short run,but not in the long run.
B)in the long run,but not in the short run.
C)permanently.
D)both in the long run and the short run.

Question

Quizplus · Accepted Answer

Monetary policy authorities can influence real interest rates in the short run through adjustments in nominal interest rates and inflation expectations. However, in the long run, real interest rates are determined by real factors such as productivity and savings-investment balances, limiting the influence of monetary policy.

Monetary Policy Authorities Can Affect Real Interest Rates