If an Expansionary Monetary Policy Raises Expectations for Inflation, Then

Multiple Choice

If an expansionary monetary policy raises expectations for inflation, then interest rates:

A) may not fall as normally expected but may rise due to the Fisher effect.
B) may not rise as normally expected but may fall due to the Fisher effect.
C) will rise but will rise even more than normally expected due to the Fisher effect.
D) will fall but will fall even more than normally expected due to the Fisher effect.