Assume the Long-Term Nominal Interest Rate Is 7% and the Expected

Multiple Choice

Assume the long-term nominal interest rate is 7% and the expected inflation rate is 3%.If the Bank of Canada increases the money supply and as a result,the expected inflation rate increases to 5%,then based on the Fisher effect,the long-term real interest rate will

A) remain at 4%.
B) increase to 6%.
C) fall to 3%.
D) increase to 9%.