When deflation occurs Question 14 options: the nominal interest rate is equal to the real interest rate because inflation rate is zero. the nominal interest rate is greater than the real interest rate because inflation rate is positive. the real interest rate is greater than the nominal interest rate because inflation rate is negative. as price level falls, people increase their spending that leads to a higher economic growth.
Added by Mar H.
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The nominal interest rate is the stated interest rate without adjustment for inflation, while the real interest rate is the nominal rate adjusted for inflation. The inflation rate measures the rate at which the general price level of goods and services is rising. Show more…
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