If a country had deflation of 2 percent while the nominal interest rate increased by 1 percentage point,how would the real interest rate change?
A) The real interest rate would decrease by 1 percentage point.
B) The real interest rate would increase by 1 percentage point.
C) The real interest rate would decrease by 3 percentage points.
D) The real interest rate would increase by 3 percentage points.
Correct Answer:
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