Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 30 - Part X - Money Growth and Inflation - Problems and Applications - Page 656: 5

Answer

Increases by the same amount that the inflation rate increases.

Work Step by Step

According to the Fisher effect, the increase in the inflation rate will raise the nominal interest rate by the same amount than the increase in the inflation rate, and the real interest rate will be unaffected
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