People expect an inflation rate of 5 percent and the real interest rate is positive. Consequently the nominal interest rate will be

A) more than 5 percent.
B) 5 percent.
C) less than 5 percent.
D) Without more information it is impossible to tell if the nominal interest rate will be more than, less than, or equal to 5 percent.

ANSWER:

A) more than 5 percent.