Suppose the real rate of interest is 2% and the rate of inflation is 8%. The nominal rate of interest is approximately:

4%. 6%. 10%. 16%.


In the 1980s checking accounts that earned interest became widely available for consumers. What change in behavior would an economist expect?

marginal propensity to consume should rise.
marginal propensity to consume should fall.
velocity of M1 should rise.
velocity of M1 should fall.


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