When John was in college and his income was low, he drank "Red Ribbon" beer. As his income increased, he purchased better-quality beer and less "Red Ribbon." Which graph in the above figure best represents John's Engel curve for "

If autonomous investment increases by $200 billion and the marginal propensity to consume (MPC) is 0.5, then

A) real Gross Domestic Product (GDP) will rise by $100 billion. B) real Gross Domestic Product (GDP) will rise by $200 billion. C) real Gross Domestic Product (GDP) will rise by $400 billion. D) real Gross Domestic Product (GDP) will decrease by $100 billion.

In a world of rational expectations,

A) an anticipated increase in money supply leads immediately to higher nominal interest rates. B) an anticipated increase in money supply leads immediately to lower nominal interest rates. C) an unanticipated increase in money supply leads immediately to higher nominal interest rates. D) an unanticipated decrease in money supply leads immediately to lower nominal interest rates.