Under the assumptions of the Fisher effect and monetary neutrality, if the money supply growth rate rises, then A. the nominal interest rate rises, but the real interest rate does not. B. the real interest rate rises, but the nominal interest rate does not. C. neither the nominal nor the real interest rate rise. D. both the nominal and the real interest rate rise.
Under the assumptions of the Fisher effect and monetary neutrality, if the money supply growth rate rises, then A. the nominal interest rate rises, but the real interest rate does not. B. the real interest rate rises, but the nominal interest rate does not. C. neither the nominal nor the real interest rate rise. D. both the nominal and the real interest rate rise.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Under the assumptions of the Fisher effect and monetary neutrality, if the money supply growth rate rises, then
A. the nominal interest rate rises, but the real interest rate does not.
B. the real interest rate rises, but the nominal interest rate does not.
C. neither the nominal nor the real interest rate rise.
D. both the nominal and the real interest rate rise.
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