Problem 3-29 Real interest rates The two year interest rate is 10%, and the expected annual inflation rate is 5%. a. What is the expected real interest rate? b-1. If the expected rate of inflation suddenly rises to 7%, what does Fisher's theory say about how the real interest rate will change? b-2. If the expected rate of inflation suddenly rises to 7%, what will be the new nominal rate? Complete this question by entering your answers in the tabs below. If the expected rate of inflation suddenly rises to 7%, what does fisher's theory say about how the real interest rate will change? it the expecind rate of inflation suddenly rises to 7%, what does Fisher's theory say about now the roal interest rate will change