Question 18 of 28 Map Sapling Learning Nominal Interest Rate B Nominal Interest

Question

Question 18 of 28 Map Sapling Learning Nominal Interest Rate B Nominal Interest Rate 18 Which of the four graphs to the right best demonstrates the Fisher effect? 14 12 o 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Quantity of Loanable Funds Quantity of Loanable Funds Nominal Interest Rate D Nominal Interest Rate C Which of these statements best summarizes the impact of the Fisher effect? 18 18 14 O consumers consider future inflation 12 O Inflation is ignored by borrowers. O The interest rate remains stable. E1 O Interest rates are unpredictable. 0 10 20 30 40 50 60 70 BD 90100 Quantity of Loanable Funds Quantity of Loanable Funds AO Previous check Answer O Next Exit Hint

Explanation / Answer

1.) correct graph is B which shows that rise in expected future inflation increases nominal interest rate but it do not effect quantity of loanable funds or expected real interest rate.

2.)Consumeres considers future inflation which leads to rise in nominal interest rate.

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