Financial Sector

It decreases the supply of money.

It increases demand for money but not supply.

It has no effect on the supply of money.

It increases the supply of money.

The interest rate after taxes are taken into account.

The interest rate not adjusted for inflation.

The growth rate of the overall economy's price level.

The real cost of borrowing money expressed as a percentage.

Exports become cheaper and imports become more expensive.

Both exports and imports become cheaper.

Exports become more expensive and imports become cheaper.

Both exports and imports become more expensive.

There's no way to determine how they compare without additional information.

The real rate is higher than the nominal rate.

The nominal rate is higher than the real rate.

They are equal.

3%

2%

5%

7%

The nation’s currency strengthens due to increased demand from yield-seeking investors.

The nation’s currency weakens as export demands decline because higher rates slow economic growth domestically.

A one-for-one adjustment in $i$ relative to changes in $\pi^e$.

A less than proportional adjustment in $i$ relative to changes in $\pi^e$.

No correlation between $i$ and changes in $\pi^e$.

An inverse relationship between $i$ and $\pi^e$.

The nominal interest rate.

The expected inflation rate.

The inflation-adjusted interest rate.

the real interest rate.

Raise nominal interest rates with clear forward guidance to manage expectations of future inflation.

Cut nominal interest rates without altering real interest rates to boost employment in short term.

Simultaneously raise real and lower nominal interest rates for immediate effect on both variables.

Keep both real and nominal interest rates constant while using fiscal stimulus to address unemployment.

It fluctuates unpredictably due to market forces unrelated to inflation.

It increases as higher prices lead to more savings.

It decreases because inflation erodes purchasing power.

It remains unchanged since only the nominal rates were mentioned.