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At his house in Vienna, Angelo tells the audience that he's been praying a lot lately, but even when he prays, he thinks of Isabella, which makes him feel slimy.
A servant announces that Isabella has arrived and Angelo gets all hot and bothered.
Isabella enters and Angelo tells her immediately that Claudio must die.
Angelo declares that pardoning a fornicator like Claudio would be as bad as pardoning a murderer and then compares illegitimate children (like the one Juliet and Claudio have made) to counterfeit coins. (This is weird, we know. Check out "Symbolism" if you want to know what we think about this.)
Isabella points out that divine law forbids murder and fornication equally, but earthly law says that murder is worse.
Angelo slyly asks Isabella if she would rather "give up [her] body to sweet uncleanness" or have her brother sentenced to death.
Isabella doesn't understand what Claudio is getting at and replies that she'd rather give her "body" than her "soul."
Angelo propositions her again and, once more, Isabella doesn't catch his drift.
Angelo notes that Isabella is either completely clueless or she's craftily pretending she doesn't know what he means.
Angelo finally comes right out and asks what Isabella would do if she had a choice between letting Claudio die or "lay[ing] down the treasures of [her] body" to save his life.
Isabella says she'd rather die than "yield [her] body up to shame."
Angelo says fine, your brother is going to die.
Isabella says that sleeping with a man would be like a death for her.
Angelo accuses her of being as cruel as the death penalty and then claims that he loves Isabella.
Isabella points out that her brother loves Juliet and he's been sentenced to death for it. She threatens to tell on Angelo if he doesn't set her brother free immediately.
Angelo points out that nobody will believe her because he is an important and well-respected member of the community. Also, if Isabella doesn't agree to sleep with him, Angelo is going to make sure Claudio's death is long and painful. Isabella's got until tomorrow to decide.
Isabella delivers a "woe is me" type speech and says she'll go to her brother immediately. She's certain that Claudio will agree with her that her chastity is far more important than his life.