Suppose that the equilibrium nominal interest rate is 5 percent ...

[B]

Suppose that the equilibrium nominal interest rate is 5 percent and the equilibrium quantity of money is 1 trillion. At any interest rate below 5 percent,
 
  A) the supply of money will decrease.
  B) there will be a surplus of money and bond prices will increase.
  C) the interest rate will fall and bond prices will fall.
  D) there will be a surplus of money and bond prices will fall.
  E) the interest rate will rise and bond prices will fall.

Question 2

Classical growth theory predicts that economic growth
 
  A) is merely an illusion.
  B) will continue at the classical rate of 3 percent forever.
  C) occurs because of hard-working citizens.
  D) decreases the supply of labor.
  E) will eventually stop because of population growth.

[dpost18]

Answer to Question 1

E

Answer to Question 2

E

[B]

YES! Correct, THANKS for helping me on my review

[rachel]

Gracias!