Other things equal, ________ interest rates increase the government deficit because of ________ government interest payments.
A. low; higher
B. low; lower
C. high; lower
D. high; higher
Answer: D
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In a world of certainty, the key decisions influenced by the riskless interest rate are
A) risk premiums demanded by investors. B) portfolio decisions. C) diversification decisions. D) consumption versus saving decisions.
According to supply-side economists, lowering corporate income taxes:
a. results in wage hikes for employees but no economic growth. b. moves society toward greater income equality. c. checks the expansion of real GDP and employment. d. stimulates investment and economic growth. e. does not create enough incentive for producers to increase production.
Several producers in industry A developed an improved technology that reduces the quantity of resources used to produce a given output. Which of the following would be expected?
a. The per-unit costs of production of the firms adopting the technology would increase. b. In the short run, economic profits would be earned by the earliest firms adopting the technology. c. Product price would immediately fall to the minimum average total cost of the firms quickly adopting the technology, thus retarding the rate at which firms enter the industry. d. Producers who adopt the technology will have short-run economic losses.
An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in:
A. macroeconomic research. B. microeconomic research. C. empirical research because there is no economic theory related to these variables. D. theoretical research because there is no data on these variables.