Question

In​ August, 1979, the annual rate of inflation in the U.S. was nearly​ 12%, and the U.S.​ short-term nominal interest rate was nearly​ 10%. Over the next 35​ years, both the rate of inflation and​ short-term nominal interest rate tended to fall. By August​ 2014, the rate of inflation was about​ 2% and the​ short-term nominal interest rate was close to​ 0%. How has the real​ short-term interest rate changed from 1979 to​ 2014?

Answer 1

The real rate remained stable at minus - ​2%.

Step-by-step explanation:

This type of movement usually means that the conditions of the credit market have been usually stable throughout time and that the movements of ups and downs tells us that the interest rate not only is real, but it will be relatively stable a lot of time.