Question

If the nominal interest rates rises, then the inflation rate must have _______.

1) True
2) False

Answer 1

If the nominal interest rate rises, then the inflation rate must have False.

Step-by-step explanation:

If the nominal interest rate rises, then the inflation rate must have False. This is because higher nominal interest rates indicate higher borrowing costs, which can discourage borrowing and decrease inflation. On the other hand, lower nominal interest rates can stimulate borrowing and increase inflation. Therefore, there is an inverse relationship between nominal interest rates and inflation.