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AP® Macroeconomics

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Moderate

Inflation Rate Rises: Consequences with Nominal Interest Rates

APMACR-2PN87I

When the inflation rate rises, what happens to nominal interest rates?

A

Nominal interest rates are unaffected.

B

The effect on nominal interest rates is indeterminate.

C

Nominal interest rates fall.

D

Nominal interest rates rise.

E

Nominal interest rates match the inflation rate.