Nominal vs Real Interest Rates

Question 1

What equation relates the real interest rate to the nominal interest rate?

Answer 1

Question 2

What equation can be used to calculate the risk premium on a risky bond?

Answer 2

Question 3

How can the IS relation be rewritten to reflect the distinction between the real and nominal interest rate?

Answer 3

Question 4

If we view the Central Bank as choosing the real interest rate, how can the IS and LM relations be rewritten?

Answer 4