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Negative interest rates. Is it possible to have promised negative nominal interest rates? Why? (Select the best response.) A. Yes. Nominal rates can be negative
Negative interest rates. Is it possible to have promised negative nominal interest rates? Why? (Select the best response.) A. Yes. Nominal rates can be negative if the defiation (negative inflation) is large enough to wipe out the reward for waiting. B. Yes. Nominal rates can be negative if the real interest rate is negative and is large enough to wipe out the inflation. C. No. Nominal rates can not be negative in the real world because neither the real rate nor the inflation can be negative. D. No. Nominal rates can not be negative in the real world; otherwise, borrowing and lending will cease and people would rather hold cash
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