According to the Fisher hypothesis, if the real interest rate is 2 percent and the inflation rate falls from 3 percent to 1 percent, then the nominal interest rate will ____ percentage points and the real interest rate will decline by ____ percentage points.
A. decline by 0; 2
B. increase by 2; 2
C. increase by 0; 0
D. decline by 2; 0
Answer: D
Business
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