QCEVault

Economic management — Question 68

Original QCE Vault practice · 5 marks

Q68 · Practice questionComplex familiar5 marks

QUESTION 68 (5 marks)

The nominal cash rate falls from 5% to 4.5%, while expected inflation falls from 4% to 2%. Using the exact real-rate ratio, calculate the real cash-rate proxy in both periods. Assess the statement that the nominal cut alone proves monetary conditions became easier.

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