Which of the following statements is true?

a) If real interest rates are negative, lenders incur loses.

b) If nominal interest rates remain the same and the inflation rate falls, real interest rates increase.

c) Cost-push inflation is caused by an increase in resource costs.

d) Demand-pull inflation is caused by excess total spending.

e) All of these are true.

Question

Business

Guillermo

20 January, 22:07

Which of the following statements is true?

a) If real interest rates are negative, lenders incur loses.

b) If nominal interest rates remain the same and the inflation rate falls, real interest rates increase.

c) Cost-push inflation is caused by an increase in resource costs.

d) Demand-pull inflation is caused by excess total spending.

e) All of these are true.

+3

Answers (1)

Know the Answer?

John Farley · Answer 1

e) All of these are true.

Explanation:

Each option is correct.

A : If lending rate is negative, it means that not only will borrowers pay nothing as interest, they will pay less than the principal borrowed.

C: Cost-push inflation occurs when cost of raw material rises or when raw materials become scarce due to trade wars.

D Demand pull inflation arises due to higher purchasing power or when demand exceeds supply. He more money is chasing fewer goods.