Nominal interest rates are quoted at a variety of maturities, corresponding to different lengths of loans. For example, in late 2004 the U.S. government could take out ten-year loans at an annual...

Nominal interest rates are quoted at a variety of maturities, corresponding to different lengths of loans. For example, in late 2004 the U.S. government could take out ten-year loans at an annual interest rate of slightly over 4 percent, whereas the annual rate it paid on loans of only three months’ duration was slightly under 2 percent. (An annualized interest rate of 2 percent on a three-month loan means that if you borrow a dollar, you repay $1.005 = $1 + (3/12)
 $0.02 at the end of three months.) Typically, though not always, long-term interest rates are above short-term rates, as in the preceding example from 2004. In terms of the Fisher effect, what would that pattern say about expected inflation and/or the expected future real interest rate?