In the Keynesian cross diagram, the 45-degree line represents the short-run equilibrium condition that:

In the short run, an increase in the growth rate of the quantity of money ________ the nominal interest rate and in the long run it ________ the nominal interest rate

A) lowers; lowers B) raises; lowers C) lowers; raises D) raises; raises E) does not change; raises

Let the production function be q = ALaKb. The function exhibits increasing returns to scale if

A) a + b = 1. B) a + b > 1. C) a + b < 1. D) Cannot be determined with the information given.