Refer to the above figure. Which of the graphs are consistent with the age-earnings profile?

People know that the inflation rate will decrease from 7 percent to 3 percent. As a result

A) the nominal interest rate falls by 4 percentage points. B) the nominal interest rate is constant. C) the nominal interest rate rises by 4 percentage points. D) the nominal interest rate equals 3 percent.

Suppose government finds it can increase the equilibrium real GDP $45 billion by increasing government purchases by $18 billion. On the basis of this information, we can say that the:

A. MPS in this economy is .4. B. MPC in this economy is .4. C. multiplier does not apply in this economy. D. multiplier is 3.