3) If the nominal interest rate is 11%, the inflation rate is 4% and the tax rate is 25%, what is the real after-tax interest rate?3) _______

A) 5.25 percent

B) 10 percent

C) 4.25 percent

D) -1.25 percent

E) 8 percent

11) Which of the following is an example of a fiscal policy designed to counter a recessionary gap?11) ______

A) decreasing transfer payments

B) increasing transfer payments

C) decreasing government expenditures on goods and services

D) increasing debt interest payments

E) increasing taxes

12) Expansionary fiscal policy 12) ______

A) increases short-run aggregate supply.

B) decreases aggregate demand.

C) increases long-run aggregate supply.

D) increases aggregate demand.

E) A, C, and D are correct.

13) If real GDP is less than potential GDP, which of the following fiscal policies would increase real GDP? 13) ______

A) a decrease in taxes

B) an increase in government expenditures

C) a fall in the interest rate

D) Both A and B are correct

E) Both B and C are correct.