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1) If the consumption function is given by C = 500 + 0.5( Y – T),...

1) If the consumption function is given by C = 500 + 0.5( Y – T), and Y is 8,000 and T is given by T = 200 + 0.2 Y, then C equals: A. 2,400. B. 2,800. C. 3,600. D. 4,200.

2) The real interest rate is the: A. nominal interest rate corrected for the rate of inflation. B. rate of interest actually paid by banks. C. rate of inflation minus the nominal interest rate. D. rate of interest actually paid by consumers.

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