Question

Which of the following would be most likely to lead to increases in nominal interest rates?

a. There is a decrease in expected inflation.
b. The economy falls into a recession.
c. A new technology such as the Internet has just been introduced, and it increases investment opportunities.

Answer 1

c. A new technology such as the Internet has just been introduced, and it increases investment opportunities.

Step-by-step explanation:

Nominal interest rate is the sum of real interest rate and expected inflation rate.

If expected inflation rate falls, the nominal interest rate also falls.

During a recession, people are more unwilling to borrow funds ,this pushes interest rate down.

If investment opportunities increases, the demand for funds would increase and nominal interest rate would increase too.

I hope my answer helps you