Assuming the Fisher Effect Holds, and Given U

Multiple Choice

Assuming the Fisher Effect holds, and given U.S. tax laws, an increase in inflation

A) increases the real interest rate and the after-tax real rate of interest.
B) increases the Real interest rate and the after-tax real rate of interest.
C) does not change the real interest rate but raises the after tax real rate of interest.
D) does not change the real interest rate but reduces the after-tax real rate of interest.