Asked by Radhika Singh on May 04, 2024
Verified
If the nominal interest rates rises, then the inflation rate must have increased.
Nominal Interest Rates
The interest rate before taking inflation into account, representing the face value of interest payments.
Inflation Rate
An increase in the overall price levels of goods and services in an economy during a specified period.
- Examine the connection between nominal interest rates, actual interest rates, and the rates of inflation.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
False
Explanation :
Nominal interest rates can rise for various reasons, not just because of an increase in inflation. They can also increase due to changes in monetary policy, expectations of future inflation, or changes in the demand for or supply of loanable funds.
Learning Objectives
- Examine the connection between nominal interest rates, actual interest rates, and the rates of inflation.