A lower interest rate makes more investment projects feasible, meaning that
a. there is a direct relationship between the rate of interest and the quantity of investment spending
b. there is an inverse relationship between the rate of interest and the quantity of investment spending
c. there is no relationship between the rate of interest and the quantity of investment spending
d. the demand curve for investment spending is horizontal
e. the demand curve for investment spending is vertical
B
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Which of the following statements is an example of the Fed's conditional commitment policy?
A) "In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period." B) "The Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time." C) "Policy accommodation can be removed at a pace that is likely to be measured." D) "The exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, and inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal."
In the Keynesian liquidity preference framework, an increase in the interest rate causes the demand curve for money to ________, everything else held constant
A) shift right B) shift left C) stay where it is D) invert
The relationship between the level of investment and the change in the level of national income is the
a. principle factor generating the innovation cycle b. marginal propensity to invest c. administrative lag d. accelerator e. principle factor generating the real business cycle
The assumption that individuals will not intentionally make decisions that will leave them worse off is known as
A. the rationality assumption. B. a model or theory. C. macroeconomic analysis. D. microeconomic analysis.