Suppose the nominal interest rate is 5 and the rate of inflation ...

[fahad]

Suppose the nominal interest rate is 5 and the rate of inflation is 5. The real interest rate is therefore
 
  A) 0.
  B) 1.
  C) 5.
  D) 6.

Question 2

Suppose the Federal Reserve buys 50 million worth of securities from a commercial bank. As a result, the monetary base ________, and the quantity of money will ________ 50 million due to the ________.
 
  A) increases; increase by more than; money multiplier
  B) decreases; decrease by more than; money multiplier
  C) increases; increase by more than; expenditure multiplier
  D) decreases; decrease by less than; expenditure multiplier
  E) increases; decrease by; currency drain

[ryansturges]

Answer to Question 1

A

Answer to Question 2

A

[fahad]

TYSM

[Joy Chen]

Excellent