Let r denote the real interest rate, i denote the nominal interest rate, and $\pi$ denote the rate of inflation. The equation $i = r + \pi$ is called:
A) the money supply
B) the quantity equation
C) the Fisher equation
D) the quantity theory of money
E) money neutrality

Question

Quizplus · Accepted Answer

The equation $i = r + \pi$ is known as the Fisher equation, which describes the relationship between nominal interest rates, real interest rates, and inflation.

Let R Denote the Real Interest Rate, I Denote the Nominal