An Increase in Expected Inflation Will

Multiple Choice

An increase in expected inflation will

A) increase the nominal interest rate on both short-term and long-term bonds.
B) decrease the nominal interest rate on both short-term and long-term bonds.
C) increase the nominal interest rate on short-term bonds but not affect the nominal interest rate on long-term bonds.
D) increase the nominal interest rate on long-term bonds but not affect the nominal interest rate on short-term bonds.