If Prices Are Expected to Decrease, and the Nominal Interest

If prices are expected to decrease, and the nominal interest rate is close to zero,

A) the real interest rate will be less than zero, so investment spending will increase a lot.
B) the real interest rate could still be rather high, so investment spending will not be stimulated by an expansionary monetary policy
C) the real interest rate is unaffected, so investment spending continues as before.
D) the real interest rate is no longer important in investment spending decisions.

Correct Answer:

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