If the interest rate fell to zero, would that necessarily stimulate the economy?
What will be an ideal response?
In most cases it would because it would stimulate investment. However, the interest rate is not the only factor that affects planned investment. If the profit expectations of prospective investors were negative, however, lowering the interest rate to zero might not do much good. If businesses borrowed and invested only to find themselves losing money, they would not be interested in investing. In addition, investment plans are affected by the age and size of the existing capital stock, corporate tax policy, and changes in technology.
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Which primary trade partner of India suffered setbacks that ultimately helped lead India to embark on economic reform?
A) The United Kingdom B) The United States C) The Soviet Union D) South Korea
Which of the following is the result of a banking panic?
a. A decrease in the demand deposit multiplier b. An increase in the money supply c. An increase in bank reserves d. A decrease in the money supply e. An increase in the demand deposit multiplier
U.S. exports:
a. rise as our GDP rises, and fall as our GDP falls b. fall as our GDP rises, and rise as our GDP falls c. are insensitive to our GDP d. have no relation to our GDP
The assertion that the median voter is "king" refers directly to the result established by the
a. Arrow impossibility theorem. b. Condorcet paradox. c. median voter theorem. d. Borda mechanism.