If the real interest rate exceeds the expected profit rate, firms should not invest in new capital since they could earn more by loaning the funds to other firms.

a.True

b.False

Over the flat range of the SAS curve in Keynesian analysis, a rightward shift of the AD curve will ___________________.

a.result in an increase in output but not prices

b.result in a decrease in both output and prices

c.not affect either output or prices

d.result in an increase in both output and prices

Suppose that in the labor market for doctors, the equilibrium real wage rate is $35.00. At which wage rate would unemployment prevail in this labor market?

a.$40.00

b.$34.00

c.$10.00

d.$35.00