(Q26 IN TYPE B) IF WE ASSUME THAT IN THE MARKET PLACE THE NOMINAL...

23. (Q26 in Type B) If we assume that in the market place the nominal rate of interest is greater than that real rate of interest we can normally assume that A) there is deflation in the economy B) the CPI is increasing C) Price of the average home is going down D) No one wants to borrow money as the rates are too high Solution B. It implies that we are in an inflationary environment and that the CPI (consumer price index) is going up.