The Fisher Equation Exercise 1 Suppose the real interest rate is 3%. Instructions: Enter your answers as a whole number. a. If people expect prices to rise by 4%, what would be the nominal interest rate for loans? b. Now suppose that people expect prices to rise by 6%, what would be the nominal interest rate for loans? The nominal interest rate will ncrease to 96. c. The real interest rate is: the amount earned to compensate people for postponing consumption. equal to expected inflation minus the interest rate. the cost of borrowing money stated in percentage terms. Oequal to the interest rate plus expected inflation