In the long run, when an economy experiences inflation, the price level _{--------------------}and the nominal Interest rate_{--------------------} . A)falls; rises B)rises; falls C)rises; remains constant D)rises; rises E)remains constant; rises

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In the long run, inflation leads to a general increase in the price level. According to the Fisher effect, nominal interest rates tend to rise with inflation expectations to maintain real interest rates.

In the Long Run, When an Economy Experiences Inflation, the Price