Question: Suppose the inflation rate increases from 3 % to 5 % . Does the Fisher equation imply that this increase will result in a fall

Suppose the inflation rate increases from 3% to 5%. Does the Fisher equation imply that this increase will result in a fall in the real interest rate? Explain. Additionally, using this formula and todays rate of inflation, what does the Fisher formula imply that nominal interest rates should be, given the historic average of real interest rates? Explain.

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