Suppose the real rate is 4 percent and the nominal rate is 9 percent. Now investors expect a sudden doubling in the rate of inflation. According to the Fisher effect, what new rate of inflation is expected? If the depreciation, income and wealth effects are at work, what do you conclude is the new expected rate of inflation?

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The Answer of Suppose the real rate is 4 percent and the nominal rate is 9 percent. Now investors expect a sudden doubling in the rate of inflation. According to the Fisher effect, what new rate of inflation is expected? If the depreciation, income and wealth effects are at work, what do you conclude is the new expected rate of inflation?

Suppose the Real Rate Is 4 Percent and the Nominal