Explain how a decrease in the interest rate will affect investment.
What will be an ideal response?
The interest rate is the cost of borrowing investment funds. When the interest rate decreases, then the cost of borrowing falls, and so firms find it profitable to undertake additional investments. Therefore, we find an inverse relationship between the interest rate and investment spending.
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The value of the marginal product of labor is given by:
A) the ratio of the marginal product of labor to the wage rate. B) the product of the marginal product of labor and the wage rate. C) the ratio of the marginal product of labor to the price of the final good produced. D) the product of the marginal product of labor and the price of the final good produced.
The above figure shows the demand curve for crude oil. If the market price is $10 a barrel, what is the price elasticity of demand?
A) -.02 B) -1 C) -10 D) -500
The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant?
A. Price of electric cars B. Price of gasoline cars C. Quantity of electric cars demanded by buyers D. How much sellers are charging customers for electric cars
Answer the following statement(s) true (T) or false (F)
1. A competitive firm will exit an industry in the long run if the market price falls below the firm's break-even price. 2. For a competitive firm with a downward sloping marginal cost curve, the supply curve and the marginal cost curve look exactly the same 3. There is no reason for a competitive firm to stay in business if it is making zero economic profit. 4. A decrease in firms’ variable costs will cause the output of the market to decrease. 5. A technological advance that reduces firms’ variable costs will lead to higher profits in the long run of a perfectly competitive industry.