True or False:
1. Menu costs and shoe-leather costs are modest, regardless of the rate of inflation.
2. The real interest rate equals the nominal interest rate plus the inflation rate.
3. When the inflation rate exceeds the nominal interest rate, real interest rates are negative.
4. As long as nominal interest rates cannot be negative, real interest rates cannot be negative.
5. If people correctly anticipate inflation, they will behave in a manner that will largely protect them against loss.
6. When people start expecting future inflation, creditors become less willing to lend funds at any given interest rate because they fear they will be repaid in dollars of lesser value than those they loaned.
7. When borrowers of funds start expecting future inflation, the demand for funds decreases.
8. When both suppliers and demanders of funds begin to expect inflation, it will push up the interest rate to a new, higher equilibrium level.