II = P1 (k1, n1) Pinvet PN] + P2f(k2, n2) 1 +12 Prinvnet P 1 + 12 1+12 where Pt is the numeraire, f(kt, nt) is a production function, wt is the real wage rate paid to labor input, nt, it is the nominal interest rate, and the flow of net investment is defined as: invnet kt+1 (1 8)kt - where kt is the current period real stock of capital which depreciates at rate > 0. Assume k is predetermined. (a) Use the Fisher Equation to transform the profit function from nominal terms into real terms.