Which is a plausible cause of the movement in Figure 13.1 from ...

[Haya94]

Which is a plausible cause of the movement in Figure 13.1 from point 1 to point 2?
 
  A) a change in expectations that causes a decline in the real interest rate for investments
  B) a decrease in expected inflation
  C) the economy's self-correcting mechanism
  D) the central bank achieves a negative value for the nominal interest rate
  E) none of the above

Question 2

In an economy with production function Y = 1.5  , K = 343, and L = 512. If factor markets are in equilibrium, then the rental price of capital is (approximately) ________, and the real wage is (approximately) ________.
 
  A) 0.5; 0.8
  B) 7; 8
  C) 0.9; 1.35
  D) 1.4; 0.4
  E) 0.6; 0.9

[Christopher]

Answer to Question 1

A

Answer to Question 2

E