If a Country Had Deflation of 2 Percent While the Nominal

Multiple Choice

If a country had deflation of 2 percent while the nominal interest rate increased by 1 percentage point,how would the real interest rate change?

A) The real interest rate would decrease by 1 percentage point.
B) The real interest rate would increase by 1 percentage point.
C) The real interest rate would decrease by 3 percentage points.
D) The real interest rate would increase by 3 percentage points.