A) Would you instead earn a 4 % nomical or 4% real interest rate? Describe by describeing the difference between the nominal and real variables.
B) Assume that the inflation averages are 3% over the next few years. Would you instead experience a constant 3% inflation or an inflation which was randomly 2% or 4% describe?
When the Federal Reserve rears that the inflation is imminent, the fed tends to push up the interest rates that leads to the higher unemployment rates. Does the Fed not care what jobs are lost? Illustrate.