How does a decrease in government budget deficits affect the equilibrium interest rate in the loanable funds model?
A) Interest rate increases.
B) Interest rate decreases.
C) Interest rate stays the same.
D) Interest rate first increases and then decreases back to the original level.
B
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Generally, when the Federal Reserve lowers interest rates, investment spending ________ and GDP ________
A) decreases; increases B) increases; decreases C) increases; increases D) decreases; decreases
Firms in a perfectly competitive industry are earning economic losses. This is
A) a signal to entrepreneurs that some of the firms in the industry should exit and the resources of these firms should move into production of other goods. B) a signal to entrepreneurs that additional resources should be brought into this industry in order to make it profitable. C) a signal that the entrepreneurs are doing a poor job and should become workers for someone else. D) a signal to government officials that a subsidy is needed for the firms in the industry.
A CPI that equals 1.34 in 2016 (when 2010 is the base year) means that:
A. prices in 2016 are 34 percent higher than in 2015. B. the average level of prices is 34 percent higher in 2016 than in the base year. C. the CPI equals $1.34 in 2016. D. the inflation rate in 2016 is 134 percent.
A rise in the nominal exchange rate ($/€) represents a depreciation of the dollar relative to the euro, but a rise in the real exchange rate ($/€) represent an appreciation of the dollar. Explain why this is true
What will be an ideal response?