Which of the following explains why small reductions in interest rates may not lead to an increase in investment spending?
A. Excess capacity gives businesses little incentive to expand production capacity.
B. Banks are eager to make loans at the lower interest rate.
C. Investment demand is elastic with respect to the interest rate.
D. Improved expectations shift the investment demand curve to the right.
Answer: A
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Describe how a pollution-control authority might use an emissions permits system to reduce pollution.
What will be an ideal response?
Having a refundable deposit for recyclable material
A) raises the marginal private cost of disposal. B) raises the marginal social cost of disposal. C) lowers the marginal private cost of disposal. D) lowers the marginal social cost of disposal. E) does not affect disposal costs.
The burden of a tax placed on buyers is:
A. shared between buyers and sellers. B. the buyers' incidence. C. the sellers' incidence. D. higher if the tax is placed on buyers.
Which of the following provides young people with a strong incentive to make regular payments into a retirement program and invest these funds in a diverse set of stocks?
What will be an ideal response?