The Federal Reserve has held interest rates close to zero percent for the past seven years. Even

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The Federal Reserve has held interest rates close to zero percent for the past seven years. Even with low inflation, “real” interest rates have been negative.

Explain why with a zero interest rate, even low inflation makes the real interest rate negative. Can the real interest rate exceed the nominal interest rate?

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Foundations Of Economics

ISBN: 9780134486819

8th Edition

Authors: Robin Bade, Michael Parkin

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