True or false (with explanation)

a. according to the Fisher effect, when the inflation rate rises, the nominal interest rate rises by the same amount so that the real interest rate remains the same.

b. Inflation make them poorer because it raises the cost of what they buy.

c. the principle of monetary neutrality asserts that changes in the quantity of money influence nominal variables but not real variables in short run.

d. If an economy always has inflation of 10 percent per Year there is an inflation cost that will not suffer.

e. Hyperinflations occur when the government runs a large budget deficit, which the central bank finances with a substantial monetary contraction.

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1 true reason increase or decrease in inflation are caused by nominal interest rate and it is done b... View the full answer