In a market economy, businesses are encouraged to produce because of

If the real interest rate is 3 percent and the inflation rate is 2 percent, what is the nominal interest rate?

What will be an ideal response?

In the Keynesian cross diagram, an increase in investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift up, the equilibrium level of aggregate output to ________, and

the IS curve to shift to the ________, everything else held constant. A) rise; left B) rise; right C) fall; left D) fall; right