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When Inflation Rises Unexpectedly, It Is Generally the Case That

Question 42

Multiple Choice

When inflation rises unexpectedly, it is generally the case that


A) nominal interest rates and real interest rates will both rise at the same rate
B) nominal interest rates will rise while real interest rates will decline
C) real interest rates will rise while nominal interest rates will decline
D) all nominal wages will immediately be adjusted upwards
E) real wages will have to be adjusted upwards

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