If expectations are rational, the difference between the actual rate of inflation and the expected rate of inflation will be zero

Compared with a monopolist, the demand curve faced by a monopolistically competitive firm is

A) more elastic. B) more inelastic. C) perfectly elastic. D) perfectly inelastic.

Suppose the current one-year interest rate is 3%, and financial markets expect the one-year interest rate next year to be 5%. Given this information, the yield to maturity on a two-year bond will be approximately

A) 4%. B) 6%. C) 8%. D) 12%. E) none of the above