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?

Skipped

Complete this question by entering your answers in the tabs below.

$\backslash$table$[[$Req $A,$Req $B1,$Req $B2$