Interest rates are positive because
A. people prefer future consumption over current consumption.
B. usury laws require rates to be very high.
C. banks are not competitive.
D. people prefer current consumption over future consumption.
Answer: D
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If autonomous expenditure increases with no change in the price level, what happens to the AE curve and the AD curve? Which curve shifts by an amount that is determined by the multiplier and why?
What will be an ideal response?
The General Agreement on Tariffs and Trade and the World Trade Organization have resulted in
A) termination of export subsidies applied to manufactured goods. B) termination of import tariffs applied to manufactures. C) termination of import tariffs applied to agricultural commodities. D) termination of international theft of copyrights. E) a number of rounds of multilateral trade agreements.
For each of the following statements, state whether the statement is true, false, or uncertain and explain why
i. A risk neutral person is indifferent to a gamble and the expected value of the gamble. ii. A risk-averse person will never accept a gamble. iii. A risk-loving person will accept any gamble.
What happens when there is a sudden increment or decline in the supply of a specific product which affects equilibrium?
a. Capital flight b. Economic equilibrium c. Elasticity of supply d. Supply shock