If the nominal interest rate is 8 percent and the current ...

[ec501234]

If the nominal interest rate is 8 percent and the current inflation rate is 3 percent, approximately what is the real interest rate?
 
  A) 11 percent
  B) 8 percent
  C) 5 percent
  D) 3 percent

Question 2

The aggregate production function
 
  A) measures the productivity of labor as leisure decreases.
  B) increases only with increases in productivity.
  C) shows that real GDP can increase because of increased productivity as well as increased labor hours.
  D) cannot show the impacts of productivity improvements.

[jessofishing]

Answer to Question 1

C

Answer to Question 2

C