Historically, why have high inflation rates tended to be associated with high nominal interest rate?
a) individuals will spend more when they expect their investments to increase in value
b) high inflation leads to a decrease in purchasing power and thus increase the attractiveness of investment over consumption in the short term
c) the real interest needs to be high enough so that individuals can expect their savings to have greater purchasing power in the future than in the present
d) growth in investment and savings is encouraged when consumers are judged to be overspending