Post Utme Babcock University 2019 Economics Question 9

Practice objective / multiple choice question 9 from the 2019 Post Utme Babcock University Economics examination.

Post Utme Babcock University 2019 Economics Objective / Multiple Choice
Question 9 POST_UTME_BABCOCK_UNIVERSITY • 2019 • ECONOMICS • objective

A country's inflation rate is 5% per annum, and its nominal interest rate is 10% per annum. If the country's central bank implements a monetary policy that reduces the money supply by 10%, what is the expected effect on the country's real interest rate?

Answer Options

A. The real interest rate increases by 5%
Correct Answer B. The real interest rate decreases by 5%
C. The real interest rate remains unchanged
D. The real interest rate increases by 10%
Correct Answer
B
Correct Option:
The real interest rate decreases by 5%

About This Question

This is Post Utme Babcock University 2019 Economics Question 9. It is one of the objective questions from the 2019 Post Utme Babcock University Economics examination.

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