For a borrower, an increase in the real interest rate A) ...

[ghost!]

For a borrower, an increase in the real interest rate
 
  A) definitely reduces current consumption and increases future consumption.
  B) reduces current consumption and has an uncertain effect on future consumption.
  C) has an uncertain effect on current consumption and increases future consumption.
  D) has an uncertain effect on both current and future consumption.

Question 2

In the New Keynesian open economy model
 
  A) the nominal exchange rate is always fixed.
  B) prices are flexible.
  C) net exports depends on the relative price of foreign goods to domestic goods.
  D) the nominal exchange rate is always flexible.

[nmyers]

Answer to Question 1

B

Answer to Question 2

C