If Inflation Had Long Been 7% and Was Therefore Expected

Multiple Choice

If inflation had long been 7% and was therefore expected to continue, then it unexpectedly increased to 4% inflation:

A) ​the real interest rate on loans issued just before the change occurred would decrease by three percentage points.
B) ​the real interest rate on loans issued just before the change occurred would increase by three percentage points.
C) ​the real interest rate on loans issued just before the change occurred would not change.
D) ​none of the above.