Refer to the scenario above. What is the sum of the payoffs to the firms if both firms use Strategy A?

In the above figure, the demand for loanable funds curve is drawn for the average expected profit. If the real interest rate is constant at 6 percent and the expected profit falls, the amount of loanable funds demanded will be

A) less than $450 billion. B) $450 billion. C) between $450 billion and $600 billion. D) greater than $600 billion.

Suppose the nominal interest rate is 4 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 5 percent. At the end of the year, you have earned:

A. a nominal increase in your savings of $40. B. an increase in your purchasing power. C. a real rate of return of 1 percent. D. All of these statements are true.