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Answer to Question #84107 in Macroeconomics for ROUPEN

Question #84107
Suppose that the nominal interest rate and expected inflation both increase by 3%. These equal increases in the nominal interest rate and expected inflation will cause:
Expert's answer

this will keep the real interest rate at the same level. According to the Fisher effect, when the real interest rate is expressed as the difference between the size of the nominal interest rate and the inflation rate.

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