Suppose the real interest rate is 4% and expected inflation is 1% . what is the nominal interest rate? nominal interest rate: % all else equal, if inflation decreases by 0.5% what will happen to the nominal interest rate? the real interest rate will increase by 0.5% . the nominal interest rate will decrease by 0.5% . the real interest rate will decrease by 0.5% . the nominal interest rate will increase by 0.5% . what do economists call the relationship between the nominal interest rate and the inflation rate? shoeleather costs fisher effect taylor rule leontief paradox