How does the value of land change when interest rates increase?
It varies inversely with interest rates. This is because an interest rate increase means that the same fixed
annual return can be generated from a smaller investment. This investment is the value of the land.
You might also like to view...
Economist Douglass North suggests that the term used to describe government bodies, development agencies, and international groups should be:
A. organizations. B. institutions. C. agencies. D. groups.
Plots of land differ in
a. quality of soil. b. topography. c. proximity to marketplaces. d. All of the above are correct.
Some children in Siliguri, India, work as low-wage professional rock breakers. The rocks they break with a hammer are used in buildings and roads. In terms of the idea of efficiency, having children break rocks with hammers:
A. is not efficient because modern equipment could crush stone with far less effort. B. could be efficient given the extremely low price of labor and high price of capital. C. is technically efficient but not economically efficient because the job does not pay a living wage. D. is economically efficient but not technically efficient because it uses too much labor relative to capital.
Suppose a perfectly competitive constant-cost industry is in long-run equilibrium when market demand increases. What will probably happen to a firm in this industry in the long run?
a. ?The equilibrium price will be higher in the long run. b. ?There will be no change in the equilibrium price and quantity supplied by the firm. c. ?It will charge the same equilibrium price but will reduce its output. d. ?It will experience higher average total costs and will reduce its output. e. ?The equilibrium price will be lower in the long run.