An increase in the expected real interest rate will
A. have the same effect on the desired capital stock as a decrease in corporate taxes.
B. have no effect on the desired capital stock.
C. increase the desired capital stock.
D. decrease the desired capital stock.
Answer: D
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Distinguish between a movement along the aggregate supply curve and a shift of the entire aggregate supply curve. What factors cause each to occur?
What will be an ideal response?
Suppose that the price of a pizza is $10 and that the price of a blouse is $30 . At her present level of consumption, Magda's ratio of marginal utility of pizza to marginal utility of blouses is 1/4 . To maximize total utility, she should
a. buy more pizzas and fewer blouses b. buy fewer pizzas and more blouses c. continue to buy the same quantities of pizza and blouses d. spend more time consuming pizza e. spend more time buying blouses
If both nominal and real GDP are increasing when the money supply is constant, than we can conclude that
A) velocity has increased. B) interest rate has fallen. C) velocity has decreased. D) interest rate has increased.
If the inflation rate is 5 percent and the real interest rate is 2.5 percent, then the nominal interest rate is
A) 10 percent. B) -2.5 percent. C) 2.5 percent. D) 7.5 percent. E) 2 percent.