1. In 2008, shortterm US Treasury Bill rates were about 4.66% and the inflation rate was about 4.08%. In 2009, interest rates were about 1.60% and inflation was about 0.09%. What was the real interest rate in 2008 and 2009?

2. If a country experiences a reduction in interest rates relative to U.S. interest rates, and there is no change in inflationary conditions, that country's investors will ____ their investments in U.S. securities, and there is ____ pressure on its currency's equilibrium value.

a. increase; downward

b. decrease; upward

c. increase; upward

d. decrease; downward