Q.

The Fisher effect .

A. States that nominal interest rates are equal to the real interest rates plus the expected inflation rate
B. States that nominal interest rates are equal to real interest rates minus the expected inflation rate
C. Predicts that as the expected inflation rate rises, so do nominal interest rates
D. Predicts that as the expected inflation rate rises, real interest rates fall
Answer» C. Predicts that as the expected inflation rate rises, so do nominal interest rates
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History of Economic Thought

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