It depends what country you're in.
Most commonly, the Central Bank has the right tools (decreasing general interest rate towards national banks) to prevent the increase in interest rates.
If interest rate increases will inflution increase or decrease?"
Increase in principal + interest payment.
The interest rate will increase since there are fewer available
NEVER
it will increase the price of bonds
4%increase
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.
Not usually. A "4 percent increase in the interest rate" usually means that there is some reference interest rate of x percent that is increased to 4 + x percent. This means that the interest paid increases from x percent of the principal to 4 + x percent of the principal. Therefore, the interest paid increases by 100 (4/x) %. For example, if a recent Federal funds rate of 1 % in the United States were to be increased by 4 %, the interest paid on any given amount of principal would increase by 400 %!
interest rate
Savings.taxes nd increase in interest rate
decrease
ahmm....the result is in your book!