You borrow $10,000 from a bank for one year at a nominal interest rate of 5%. If inflation over the year is 2%, what is the real interest rate you are paying?

Choices made by economic decision makers

a. are government decisions only b. are the primary focus of economics c. are not important in economic analysis d. occur infrequently e. do not involve ordinary citizens

If the budget deficit increases then

a. saving and the interest rate rise. b. saving rises and the interest rate falls. c. saving falls and the interest rate rises. d. saving and the interest rate fall.