To an economist, rational self-interest means that individuals try to weigh the expected marginal (additional) benefits and marginal (additional) costs of their decisions

If there are no changes in inflation expectations, a fall in the federal funds rate:

A) increases both the long-run nominal interest rate and the long-run expected interest rate. B) decreases the long-run nominal interest rate and increases the long-run expected interest rate. C) decreases both the long-run nominal interest rate and the long-run expected interest rate. D) increases the long-run nominal interest rate and decreases the long-run expected interest rate.

Refer to Figure 10.9. Other things equal, a positive demand shock is best represented as a change in equilibrium from

A) point A to point B. B) point A to point D. C) point C to point B. D) point C to point D.