Capital investment becomes more profitable for a business firm as the real interest rate decreases
a. True
b. False
Indicate whether the statement is true or false
True
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Suppose the following information describes the economy:Government purchases of goods and services1,000Household saving2,000Government transfers and interest payments500Tax collections1,500Business saving2,500Private saving equals ________; public saving equals ________; national saving equals ________.
A. 500; -1,500 B. 4,500; 0 C. 4,500; 1,000 D. 1,000; 1,000
Guaranteed benefits under government programs such as Social Security or Medicare are called
A) controllable expenditures. B) entitlements. C) automatic stabilizers. D) discretionary spending.
Refer to the figure above. The quota shown in the diagram equals
A) 200 units. B) 500 units. C) 1000 units. D) 1200 units.
Banks are exposed to interest rate risk primarily because
A) interest rates are very difficult to forecast. B) the maturities of banks' assets and liabilities differ. C) borrowers from banks are prone to default. D) depositors are always searching for a slightly higher interest rate.