If the actual inflation rate is less than the anticipated inflation rate,then the real rate of interest
A)is negative.
B)is less than the nominal rate of interest.
C)equals the nominal rate of interest.
D)is more than the nominal rate of interest.

Question

Quizplus · Accepted Answer

If the actual inflation rate is less than the anticipated inflation rate, the real rate of interest is higher than the nominal rate because the inflation adjustment is less than expected.

If the Actual Inflation Rate Is Less Than the Anticipated