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C. a higher tax on corporate profits D. none of the above. 19. If the nominal interest rate is 5% and the real interest rate
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19 - Lose 3%

- Due to inflation ( 5 - 2 = 3% ) investors' purchasing power will reduce to 2%, real rate of indicate actual purchasing power.

- Thus there will be 3% reduction in purchasing power

20 - The value of household increases due to an unexpected increases in the value of stock

- Due to increase in wealth, investor will have more money. They will demand less money from market, as there is reduction in demand for loanable fund in market, the equilibrium interest rate will fall

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