Question: Other things being equal, as expected inflation rate decreases, how does interest rates change? Interest rates increase because a decrease in the expected inflation rate

Other things being equal, as expected inflation rate decreases, how does interest rates change?

Interest rates increase because a decrease in the expected inflation rate shifts the demand curve for bonds to the left and the supply curve for bonds to the right, lowering the bond prices while raising the interest rates.

Interest rates decrease because a decrease in the expected inflation rate shifts the demand curve for bonds to the right and the supply curve for bonds to the left, lowering the bond prices and the interest rates.

Interest rates increase because a decrease in the expected inflation rate shifts the demand curve for bonds to the right and the supply curve for bonds to the right, raising the bond prices and the interest rates.

Interest rates decrease because a decrease in the expected inflation rate shifts the demand curve for bonds to the left and the supply curve for bonds to the left, raising the bond prices while lowering the interest rates.

Interest rates decrease because a decrease in the expected inflation rate shifts the demand curve for bonds to the right and the supply curve for bonds to the left, raising the bond prices while lowering the interest rates.

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