Say that initially the nominal interest rate is 6% and prices are stable, but the inflation rate the following year rises to 3%. If the real rate of interest is to remain unchanged, the nominal interest rate in the second year must:

Consider the United States' production of soy beans and running shoes. If the United States has an absolute advantage in the production of both goods compared to China,

A) only the United States can gain from trade. B) each country will be able to produce at a point beyond its PPF. C) only China can gain from trade. D) only the United States will be able to operate beyond its PPF. E) both countries can gain from trade.

Which of the following is NOT a necessary precondition for economic growth?

A) economic freedom B) democracy C) property rights D) free markets E) ALL of the above are necessary preconditions.