The following table shows the nominal interest rate and the annual inflation rate (the GDP deflator) of Japan in the period 1996–2015 (Source: World Bank). 1996-2000 2001 - 2005 2006 - 201O 2011 - 2015 Interest Rate 1.5% 1.4% 1.3% 1.2% Inflation Rate -1.9% -0.9% -0.5% 1.6% Based on this information, which of the following statements are correct? O The real interest rate in 1996-2000 was -0.4%. Japan's real interest rate has been rising consistently over this period. Japan's real interest rate turned from being positive to negative during the period. The nominal interest rate has been falling faster than the real interest rate.
The following table shows the nominal interest rate and the annual inflation rate (the GDP deflator) of Japan in the period 1996–2015 (Source: World Bank). 1996-2000 2001 - 2005 2006 - 201O 2011 - 2015 Interest Rate 1.5% 1.4% 1.3% 1.2% Inflation Rate -1.9% -0.9% -0.5% 1.6% Based on this information, which of the following statements are correct? O The real interest rate in 1996-2000 was -0.4%. Japan's real interest rate has been rising consistently over this period. Japan's real interest rate turned from being positive to negative during the period. The nominal interest rate has been falling faster than the real interest rate.
Chapter13: Inflation
Section: Chapter Questions
Problem 10SQ
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Transcribed Image Text:The following table shows the nominal interest rate and the annual inflation rate (the GDP
deflator) of Japan in the period 1996–2015 (Source: World Bank).
1996-2000
2001 - 2005
2006 - 201O
2011 - 2015
Interest Rate
1.5%
1.4%
1.3%
1.2%
Inflation Rate
-1.9%
-0.9%
-0.5%
1.6%
Based on this information, which of the following statements are correct?
O The real interest rate in 1996–2000 was -0.4%.
Japan's real interest rate has been rising consistently over this period.
O Japan's real interest rate turned from being positive to negative during the period.
O The nominal interest rate has been falling faster than the real interest rate.
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