Question: Homework Three Answer the following questions: 1. Define real interest rate with appropriate example. Explain how the Fisher Effect may leave the Real Interest rate

Homework Three Answer the following questions: 1. Define real interest rate

with appropriate example. Explain how the Fisher Effect may leave the Real

Homework Three Answer the following questions: 1. Define real interest rate with appropriate example. Explain how the Fisher Effect may leave the Real Interest rate unchanged. (Chapter 10) 2. Define MPC and MPS. Suppose at a given time, the MPC is .8. What will be the multiplier? Explain with an appropriate example. (Chapter 11) 3. What is a recessionary gap? Explain how it can be corrected (Chapter 12) 4. Define expansionary and contractionary fiscal policy. Explain how expansionary fiscal policy can close a recessionary gap. (Chapter 13) Due Date

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