A grower of commercial Christmas trees can raise blue spruce and Douglas fir. Therefore, an increase in the expected market price of Douglas firs tends to
A) reduce the planting of Douglas firs.
B) reduce the planting of blue spruce trees.
C) increase the cost of planting Douglas firs.
D) do none of the above.
Question 2
Holding the nominal interest rate constant, a ________ in the expected rate of inflation tends to ________ the real interest rate.
A) rise; increase.
B) fall, decrease.
C) fall; increase.
D) rise; improve.
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