Based on our understanding of the model presented in Chapter 3, we know with certainty that an equal and simultaneous reduction in G and T will cause

A reduction in which of the following variables will cause an increase in the amount of money individuals wish to hold in the current period?

A) current income B) the current nominal interest rate C) the current real interest rate D) expected future income E) all of the above

If the consumer price index (CPI) is 220 one year and 210 the next, the annual rate of inflation as measured by the CPI is approximately _____

a. ?2.3 percent b. ?4.6 percent c. 10 percent d. 4.8 percent e. 220 percent