28. What is the level of investment, I? (A) $250 billion. (B) $305 billion. (C) $345 billion. (D) $555 billion. The next two questions involve the following information. The real interest rate, r, is the nominal interest rate, i, minus inflation, . In formal terms, r = i. For example, if an investment offers an annual return of 5 percent, and inflation is 2 percent, then the real interest rate is 3 percent.

29. You purchase a $1,000 face-value bond for $800. The coupon is $100 per year, and inflation is 4 percent per year. What is the nominal yield on the bond? (A) 6 percent. (B) 8.5 percent. (C) 10 percent. (D) 12.5 percent.

30. You purchase a $1,000 face-value bond for $800. The coupon is $100 per year, and inflation is 4 percent per year. What is the real coupon rate on the bond? (A) 6 percent. (B) 8.5 percent. (C) 10 percent. (D) 12.5 percent.