Question: Suppose inflation expectations change such that higher inflation is expected. If the Fisher hypothesis holds, what happens? A. both nominal and real interest rates rise.

Suppose inflation expectations change such that higher inflation is expected. If the Fisher hypothesis holds, what happens?

A. both nominal and real interest rates rise.

B. real interest rates fall and the nominal interest rate remains constant.

C. real interest rates rise and the nominal interest rate remains constant.

D. nominal interest rates rise and the real interest rate remains constant.

E. nominal interest rates fall and the real interest rate remains constant

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