A painting is currently worth 100,000, and is expected to maintain its real value for three years. The real interest rate is expected to remain constant at 10. What is the present value of the painting's expected price at the end of the third year?
A) 75,131
B) 88,899
C) 96,153
D) 100,000
E) 70,000
Question 2
Suppose there is a simultaneous fiscal expansion and monetary contraction. We know with certainty that
A) output will increase.
B) output will decrease.
C) the interest rate will increase.
D) the interest rate will decrease.
E) both output and the interest rate will increase.
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