If the inflation rate falls and nominal interest rates are ...

[jrubin]

If the inflation rate falls and nominal interest rates are unchanged,
 
  A) inflation will fall.
  B) inflation will continue at the same rate.
  C) real interest rates rise.
  D) real interest rates are unaffected.
  E) real interest rates fall.

Question 2

By the method of Lagrange multipliers, the optimal value of the Lagrange multiplier equals the:
 
  A) marginal utility of income.
  B) marginal utility of each good.
  C) marginal utility per dollar spent on the last unit of each good.
  D) A and B above
  E) A and C above

[SeanoH09]

Answer to Question 1

C

Answer to Question 2

E

[jrubin]

Excellent

[kjohnson]

Gracias!