3.According to the Zero Lower Bound, which of the following statements is true?

(a) The nominal interest rate cannot be negative.

(b) The expected rate of inflation cannot be negative.

(c)The real interest rate cannot be negative.

(d)The nominal interest rate cannot be zero.

(e) The real interest rate cannot be zero

4.Net Investment equals:

(a) Gross investment minus depreciation

(b) Gross investment plus depreciation

(c) Business fixed investment less the change in inventories

(d) The change in the capital stock

(e) Both a and d

6.Suppose a businessis deciding whether or not to purchase a new piece of capital equipment. Which of the following conditions would result in the business deciding to undertake the purchase?

(a) value of marginal product = rate of depreciation

(b) value of marginal product < rate of inflation

(c) value of marginal product > user cost of capital

(d) value of marginal product > price of the capital

(e) value of marginal product < user cost of capital

12.Other things equal, a fall in the real interest rate:

(a) raises the price of consumption today relative to consumption tomorrow.

(b) reduces the price of consumption today relative to consumption tomorrow.

(c) will increase household saving.

(d) will increase precautionary saving.

(e) Will reduce current consumption and increase future consumption