An Increase in the Rate of Inflation Will

Multiple Choice

An increase in the rate of inflation will:

A) increase both the real and the nominal rate of interest.
B) decrease both the real and the nominal rate of interest.
C) increase the nominal interest rate while lowering the real interest rate.
D) increase the real interest rate but not affect the nominal interest rate.
E) increase the nominal interest rate but will not affect the real interest rate.