?

AP® Macroeconomics

Free Version

Upgrade subject to access all content

Easy

Inflation Theorists

APMACR-GXOG6K

Price level is rising at $10\%$ per year. The bank wants a real return of $3\%$. Which of the following statements are true?

I. The desired real return will automatically cause higher inflation.
II. Inflation is $10\%$.
III. The Central Bank caused the high inflation rates.
IV. According to Irving Fisher's theory, the nominal rate of interest will be $13\%$.

A

I and II only.

B

II and III only.

C

I, II, III, and IV.

D

I and IV only.

E

II and IV only.