In the text, Jorge's father invested in government bonds in the late 1960s. What principles of money and banking best explain Jorge's father's unsuccessful return on the bonds? Question options:

1)

When inflation increases, nominal interest rates decrease

2)

When inflation decreases, nominal interest rates increase

3)

When interest rate rise, the prices of bonds fall

4)

When interest rates increase, the price of bonds increase

5)

When the supply of money increases faster than the demand for it, prices fall and inflation ensues