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Suppose that the inflation rate falls If the Federal Reserve wants to increase

Suppose that the inflation rate falls. If the Federal Reserve wants to increase investment to increase the rate of growth in the economy, it is not enough to lower the nominal interest rate. The Fed must also do which of the following?

(A) Raise the real interest rate by lowering the nominal interest rate more than the decrease in the inflation rate.

(B) Raise the real interest rate, by raising the nominal interest rate more than the decrease in the inflation rate.

(C) Lower the real interest rate by raising the nominal interest rate more than the decrease in the inflation rate.

(D) Lower the real interest rate by lowering the nominal interest rate less than the decrease in the inflation rate.

(E) Lower the real interest rate bylowering the nominal interest rate more than the decrease in theinflation rate.

Apr 26 2018 View more View Less

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