Suppose that you took out a 1000 loan in January and had to pay ...

[javeds]

Suppose that you took out a 1000 loan in January and had to pay 75 in annual interest. During the year, inflation was 6 percent. Which of the following statements is CORRECT?
 
  A) The nominal interest rate is 7.5 percent and the real interest rate is 1.5 percent.
  B) The nominal interest rate is 7.5 percent and the real interest rate is 13.5 percent.
  C) The real interest rate is 7.5 percent and the nominal interest rate is 1.5 percent.
  D) The real interest rate is 6 percent and the nominal interest rate is 7.5 percent.

Question 2

The aggregate production function describes the relationship between
 
  A) real GDP and the quantity of labor employed.
  B) real GDP and the price level.
  C) the rate of growth of real GDP and inflation.
  D) real GDP and the unemployment rate.

[Jmfn03]

Answer to Question 1

A

Answer to Question 2

A

[javeds]

Excellent

[Dominic]

YES! Correct, THANKS for helping me on my review