If the real interest rate is 7.5% and the rate of inflation is 3%, what is the nominal interest rate?

In an economy where planned aggregate spending is given by PAE = 3,000 + .75Y ? 10,000r, the central bank is currently setting the interest rate at 0.06 (6 percent). If potential output equals 9,500, the central bank must ________ the interest rate to close the ________ gap.

A. lower; recessionary B. lower; expansionary C. raise; expansionary D. raise; recessionary

If the current price of pizzas is above the equilibrium price of pizzas then

A. buyers of pizzas have an incentive to buy more. B. sellers of pizzas have an incentive to decrease the price. C. buyers of pizzas have an incentive to buy less. D. sellers of pizzas have an incentive to increase the price.