Please only the right alternative for the 5 of the above questions:

1) An increase in the expected inflation rate will lead to a ..... expected real interest rate for a given nominal interest rate and .... spending on goods and services.

a. higher, higher

b. lower, higher

c. higher, lower

d.lower, lower

2)If the Fed has decided to change the federal funds rate target, the main interest rate they use to guide the federal funds rate to the new target is:

a. the interest rate on excess reserves

b. the discount rate

c. the repo rate

d. the effective fed funds rate