Answer all of these questions with the right question number next to the correct choice.

4-If a country's real interest rate is 2% and the nominal risk-free interest rate is 1%, what is the country's inflation rate?

Group of answer choices

-1%

3%

-3%

1%

5-Thanks to your stellar performance on the job, your supervisor awards you a bonus of $933. However,

things are tight for the company because of the pandemic, so your supervisor informs you that you

may get a bonus of $2,363 next year if you forego your bonus this year. If you accept this offer, what individual

rate of time preference have you revealed (in % terms to the nearest tenth, i.e., one decimal place)?

7-Real interest rates measure the actual return an investor expects to receive after subtracting the effects of inflation and other risks from a stated (nominal) rate of return. When numbers are low, say less than 10%, we can approximate the relationship between nominal rates (k), real interest rates (k*) and inflation for a default risk-free asset (i.e., T-Bills) by the Fisher approximation k_RF = k* + IP, where IP is compensation for expected inflation (an inflation premium). Suppose k= 0.25% and IP = 1.25%. What is the real interest rate the investor in the T-Bill will receive?

Group of answer choices

1%

-1%

-1.5%

1.5%

8-Rick and Patty both know that the risk-free interest rate on T-bills is 1%, and they both have the same rate of time preference. Patty decides not to buy any T-bills, but Rick buys several T-bills. Which of the following is most likely to have caused the difference in their actions?

Group of answer choices

Rick and Patty used two different web sites and received differing information on inflation.

Rick has a lower MRS than Patty.

All of the above

Patty is more risk averse than Rick.