Diversification cannot reduce market risk

With expected inflation equal to zero in the model, investment activity for an economy is:

a. a positive function of the nominal rate of interest. b. a negative function of the nominal rate of interest. c. constant in the face of differing nominal rates of interest. d. limited to the rate of growth of nominal GDP minus the inflation rate.

If ranchers in Texas fear a sharp drop in cattle prices next year, they will probably

A) bring less cattle to market this year. B) bring more cattle to market this year. C) keep supply unchanged now and bring more cattle to market next year. D) keep supply unchanged now and bring less cattle to market next year. E) do none of the above.