If the nominal rate of interest is 4.2 % and the real rate of interest is just .8 % , what is the expected inflation rate according to the Fisher Effect ?

Hint : ( 1 + R ) = ( 1 + r ) ( 1 + h )

a . Inflation is about 0.67 %

b . Inflation is about 1.77 %

C. Inflation is about 3.37 %

d. Inflation is about 1.37 %