If the interest rate goes up, what happens to the investment demand curve?
A) It shifts to the right.
B) It shift to the left.
C) It stays put.
D) We cannot tell.
C
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The adaptive expectations hypothesis implies that people:
a. adjust their expectations quickly to policy changes. b. expect the next period to be pretty much like the recent past. c. will always be correct in their forecast for the next period. d. change their expectations about the future if policy changes.
Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The GDP Price Index rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). b. The GDP Price Index falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). c. The GDP Price Index falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). d. There is not enough information to determine what happens to these two macroeconomic variables. e. The GDP Price Index and net nonreserve-related international borrowing/lending remain the same.
In his 1951 book, Social Choice and Individual Values, Kenneth Arrow used the term "transitivity" to mean
a. A beats B only if everyone prefers A to B. b. if everyone prefers A to B, then A beats B. c. if A beats B and B beats C, then A must beat C. d. everyone who is eligible to vote must vote; otherwise, the outcome is invalid.
In the expansion phase of a business cycle:
a. The inflation rate decreases, but productive capacity increases b. Employment increases, but output decreases c. Employment and output increase d. The inflation rate and productive capacity decrease