When the expected inflation rate increases, the real cost of borrowing ________ and bond supply ________?

Answer 1

Let's think through it and I'll let you come to conclusion:

By the Fisher Hypothesis, expected inflation is factored into the nominal interest rate, which is the effective rate that everyone pays. Hence, the expected inflation rate and nominal interest rate should move simultaneously. The first question depends upon how movements in the nominal interest rate impact the real cost of borrowing.

Bond supply can be thought of as a market with quantity demanded a function of the price, ceteris paribus. Thus, what is the relationship between the price of the bonds and the nominal inflation rate and real inflation rate.