If you buy a bond that delivers a 2% annual rate of interest and inflation averages 3% over the life of the bond, then the nominal rate of return is

Group of answer choices

2%

5%

0%

-1%

If you buy a bond that delivers a 2% annual rate of interest and inflation averages 3% over the life of the bond, then the real rate of return is

Group of answer choices

-1%

2%

5%

0%

The real interest rate has a lower bound at approximately zero because

Group of answer choices

The premise is false. Real interest rates do not have a lower bound of approximately zero.

No one would lend money if the real rate of return was expected to be negative.

No one would lend money if the nominal rate of return was expected to be negative.

Nominal interest rates adjust to inflation expectations

When a central bank purchases the bonds of its country to ease stress on the government's budget, this is known as _____________ and can lead to _________.

Group of answer choices

Monetizing the debt: inflation

Fiscal policy tightening : inflation

Monetizing the debt : currency appreciation

Fiscal policy tightening : currency appreciation