The equilibrium interest rate:
A. allocates the available supply of loanable funds to investment projects that have high
enough rates of return to justify the borrowing.
B. rises when the supply of loanable funds increases.
C. is the price paid for the use of any resource.
D. affects the size of total output but not the composition of that output.
Answer: A
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The simple accelerator theory suggests that investment will be rising when
A) output is rising. B) the growth of output is rising. C) output is high. D) the growth of output is high.
Cyclical unemployment arises when: a. business activity in the macroeconomy declines
b. the business cycle enters an expansionary phase. c. labor unions strike for higher wages. d. the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply.
The substitution effect of a decrease in the wage rate would lead most people to
a. supply less labor and demand less leisure. b. supply less labor and demand more leisure. c. supply more labor and demand less leisure. d. supply more labor and demand more leisure.
Compared to perfect competition, monopolies charge
a. a lower price. b. a higher price. c. the same price. d. a higher or lower price, depending on the monopoly.