The Relationship Between Inflation and Interest Rates Is the Well-Known

Multiple Choice

The relationship between inflation and interest rates is the well-known Fisher's Law, which can be expressed this way: (1 + i) = (1 + r) × (1 + i) where ________.

A) r is the nominal rate.
B) i is the real rate.
C) p is the expected percentage change in the price level of goods and services over the loan's life.
D) the nominal rate, p, reflects both the real rate and expected inflation.