The difference between the nominal interest rate and the real interest rate is:

Refer to the figure above. Everything else remaining unchanged, at what rate will the wage be held if there is downward wage rigidity in the market, when the demand curve shifts to LD2?

A) $50 B) $30 C) $40 D) $20

When current account deficits are used to finance investment spending, such deficits may be self-correcting because

A) they promote more responsible government policies. B) the resulting increase in the capital stock over time shifts the output supply curve to the right. C) the resulting increase in the capital stock over time shifts the output demand curve to the right. D) the resulting increase in national indebtedness increases labor demand.