Question

According to the Fischer Effect, which of the following are true? the real interest rate and the rate of inflation are equal.
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Here, option B is correct.

Becuase according to fishers effect,

The difference between nominal interest rate and real interest rate equals to the inflation rate.

In simple words, inflation rate = nominal interest rate minus real interest rate.

All the other options are quite irrelevant.

So, option B is correct

Add a comment
Know the answer?
Add Answer to:
According to the Fischer Effect, which of the following are true? the real interest rate and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • According to the fisher Effect, if the nominal interest rate is 1% in Japan and the...

    According to the fisher Effect, if the nominal interest rate is 1% in Japan and the real rate of return in Japan is -0.5%, what should the inflation rate be?

  • According to the Fisher equation, the real interest rate is given by a zero. b. the...

    According to the Fisher equation, the real interest rate is given by a zero. b. the nominal interest rate plus the rate of inflation c. the nominal interest rate minus the rate of unemployment. d. the rate of economic growth. e. the nominal interest rate minus the rate of inflation An implication of sticky inflation is that, through monetary policy changes, the Federal Reserve a. has no impact on inflation b. can alter the real interest rate in the long...

  • Please check my answers and explain if they are wrong? 1. If Japanese interest rate goes...

    Please check my answers and explain if they are wrong? 1. If Japanese interest rate goes up and US interest rate remains unchanged, 2. According to Fisher effect, if nominal interest rate goes up by 1%, then 3. According to Fisher effect, if expected inflation rate goes up by 1%, then 4. If expected inflation rate goes up, the supply curve for loanable fund will 5. If expected inflation rate goes up, the supply curve for loanable fund will then...

  • 22. Under which of the following assumptions would the nominal interest rate be equal to the...

    22. Under which of the following assumptions would the nominal interest rate be equal to the real interest rate? (a) expected inflation is equal to the nominal interest rate (b) expected inflation is equal to the real interest rate (c) expected inflation is negative (d) expected inflation is equal to zero (e) none of the above 23. If the nominal interest rate is less than the real interest rate, we know that (a) both the nominal or real interest rate...

  • According to the Fisher effect, an increase in the inflation rate would increase nominal interest ates"...

    According to the Fisher effect, an increase in the inflation rate would increase nominal interest ates" O True O False QUESTION 33 Economists believe that the classical dichotomy separating real from nominal variables holds in the long-run. True False QUESTION 3 Assume the economy only produces basketballs. There is a money supply of $1000. The economy produces 50 basketballs that sell for $40 each. What is nominal GDP and money velocity? "Nominal GDP = $50, velocity = 0.5" "Nominal GDP...

  • U.S. (Nominal Interest Rate) = 4% Canada (Nominal Interest Rate) = 5% According to economic theor...

    U.S. (Nominal Interest Rate) = 4% Canada (Nominal Interest Rate) = 5% According to economic theory, investors will move their funds from U.S. to Canada because they earn a better interest rate, therefore, demand for Canadian $ will increase, so Canadian $ will appreciate, and $ will depreciate. According to the fishier effect, real interest rate is assumed to usually be in equilibrium. So,                                              Nominal Interest Rate = Real Interest Rate + Expected Inflation   U.S. 4% = 3%                             + 1%...

  • nominal rate of interest The expected inflation rate is 6.6% and the real rate is 5.0%. Including the Fisher effect,...

    nominal rate of interest The expected inflation rate is 6.6% and the real rate is 5.0%. Including the Fisher effect, the nominal rate of interest is __%. Round your answer to two decimal places.

  • In which situation is the real interest rate highest? A) The nominal interest rate is 25%...

    In which situation is the real interest rate highest? A) The nominal interest rate is 25% and the inflation rate is 30% B) The nominal interest rate is 2% and the inflation rate is 1% C) The nominal interest rate is 8% and the inflation rate 5% D) The nominal interest rate is 11% and the inflation rate 9% Please provide explanation thanks

  • ​ The real interest rate A. is equal to the nominal interest rate minus the inflation rate.

    The real interest rate  A. is equal to the nominal interest rate minus the inflation rate.  B. is the interest rate that adjusts GDP for changes in prices.  C. is equal to the inflation rate minus the nominal interest rate.  D. is the interest rate that is quoted on a financial debt and a firm's assets.

  • Which of these is TRUE of the nominal risk-free rate and the real risk-free rate? Real...

    Which of these is TRUE of the nominal risk-free rate and the real risk-free rate? Real risk-free rate must always include inflation premium Nominal risk-free rate includes inflation while real risk-free rate does not Real risk-free rate excludes the product of inflation and inflation premium None of the above

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT