Question

The concept that the nominal interest rate reflects the real interest rate an dteh expected rate of inflation is known as: 1. money neutrality. 2. inflation effect 3. fischer effect ?

Answer 1

Answer:

3. Fisher effect

Explanation:

According to the Fisher Effect the real interest rate equals the Nominal Interest rate minus the expected Inflation rate. For example if they say you will have 5% as the Nominal Interest rate per year and in that year the expected Inflation rate is 3%, the Real interest rate will be 2% at the and of that year

Answer 2

Answer:

the right answer is A

Explanation:

In monetary neutrality wages, prices are still proportional to the supply of money in the country