The saving-investment diagram shows that a higher real interest rate due to a leftward shift of the saving curve
A. raises the profitability of investment for firms.
B. causes the amount of firms' investment to increase.
C. causes the total amounts of saving and investment to fall.
D. increases the total amount of saving because of the increase in the real interest rate.
Answer: C
You might also like to view...
Inflation rates during the years 1979-1981 were the highest the United States has ever experienced during peacetime
Indicate whether the statement is true or false
If all the assumptions underpinning the policy irrelevance proposition are in place, fully anticipated monetary policy will
A) affect the unemployment rate but have no impact on the level of real Gross Domestic Product (GDP). B) have an impact on real Gross Domestic Product (GDP) but cannot alter the level of unemployment. C) effectively alter both the rate of unemployment and the level of real Gross Domestic Product (GDP). D) not change either the level of real Gross Domestic Product (GDP) or the unemployment rate.
All of the following are examples of capital except:
a. the robot used to help produce your car. b. a computer used by your professor to write this exam. c. the factory that produces the costume jewelry you buy. d. the inventory of unsold goods at your local hardware store. e. an uncut diamond that you discover in your backyard.
If the typical firm in a perfectly competitive market is currently earning a 5% economic profit, what will happen in this market in the long run?
a. new firms will enter until the economic profits have disappeared. b. firms will exit until the economic profit reaches 10%. c. firms will neither enter nor exit, since 5% economic profit is enough to maintain the existing number of firms in the market. d. It depends on the rate of normal profit in this market.