The fisher effect: a. says the government can generate revenue by printing money. b. explains how prices adjust to obtain equilibrium in the money market. c. says there is a one for one adjustment of the nominal interest rate to the inflation rate. d. explains how higher money supply growth leads to higher inflation.

You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. the energy efficient model sells for $700 and will save you $45 at the end of each of the next five years in electricity costs. the standard model has features similar to the energy efficient model but provides no future saving in electricity costs. it is priced at only $500. assuming your opportunity cost of funds is 6 percent, which refrigerator should you purchase