1. Suppose that there is fear of a possible war in the future, reducing consumer confidence and inducing people to save more. To stabilize aggregate demand, the Fed should

Increase the money supply to lower interest rates

Decrease the money supply to lower interest rates

Increase the money supply to raise interest rates

Decrease the money supply to raise interest rates

2. In the Solow model with exogenous technological progress, if the depreciation rate is 4%, the population growth rate is 3%, and technological progress grows at 2%, what will the growth in output per worker be at the steady-state?

6%

0%

2%

9%

3.

If output is $7500, the level of capital is 600, capital's share of total income is 0.6, and the price of output is $4, then what is the nominal rental rate given the neoclassical theory of distribution holds?

$30

$5

$20

$7.5

Not enough information is given