Assuming the following information: -Short-term nominal interest rate is 5% -Expected inflation of 2%. -Next year's nominal rate is expected to increase by 100 basis points, but inflation will fall to 1.5%.

What is the expected change in real interest rates?

a) Increase by 150 basis points

b) Increase by 100 basis points

c) Decrease by 100 basis points

d) Decrease by 150 basis points