For which of the following goods is demand most sensitive to interest rate changes?
a. Refrigerators
b. Shoes
c. Corn
d. Textbooks
e. Motor oil
A
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If a central bank wishes to lower the foreign-exchange value of its currency, it will
A) buy domestic currency and sell foreign assets. B) sell domestic currency and buy foreign assets. C) attempt to raise domestic interest rates. D) attempt to lower the domestic price level relative to foreign price levels.
In the case study discussed in the chapter, the electronics firm was losing money by selling its calculators at a price that was below average cost.
Answer the following statement true (T) or false (F)
Over the past 40 years, the most frequent target for the Fed's monetary policy has been the: a. prime interest rate
b. federal funds rate. c. M1 money supply. d. M2 money supply. e. required reserve ratio.
Fiscal policy affects the economy
A. only in the short run. B. only in the long run. C. in both the short and long run. D. in neither the short nor the long run.