Consider the Monetary Rule

Multiple Choice

Consider the monetary rule
) If the inflation rate is 4 percent,the marginal product of capital is 2 percent,and the target rate of inflation is 3 percent,then the real interest rate should be:

A) 3.50 percent.
B) 3.25 percent.
C) 2.25 percent.
D) 1.75 percent.
E) 2.50 percent.