Suppose that the Fed increases the growth rate of the money supply causing an increase in the long-run expected rate of inflation. In the context of the Friedman effect combined with the expectations theory of the term structure:

• A. both short-term and long-term interests rates should decrease roughly by equal amounts in the short-run.
• B. short-term rates should decrease more than long-term rates in the short-run
• C. both short-term and long-term interests rates should increase roughly by equal amounts in the short-run.both short-term and long-term interests rates should increase roughly by equal amounts in the short-run.
• D. short-term rates should increase more than long-term rates in the short-run