Borrowing generally slows an economy down because borrowers must pay interest as well as returning the principal of the loan.
Answer the following statement true (T) or false (F)
False
Interest is payable to the lender, who gains, and borrowers are able to make productive use of the borrowed funds, so the borrowing helps the economy.
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An increase in aggregate demand is most likely to be caused by a(n) ________.
A. decrease in the tax rates on household income B. increase in real interest rates C. decrease in expected returns on investment D. decrease in government spending
A perfectly competitive market is in long-run equilibrium. Then demand decreases. The decrease in demand leads to
A) a rise in the price in the short run. B) the firms' incurring an economic loss in the short run. C) firms entering the market in the long run. D) none of the above
In the early 1900s, Henry Ford revolutionized the automotive manufacturing industry by instituting the assembly line. What impact did the assembly line method for producing automobiles have on the per-worker production function for Ford?
A) It became linear. B) It shifted down. C) It shifted up. D) It became flatter.
Which of the following is correct?
A. The effect of a compensated price change equals the effect of an uncompensated price change plus the effect of providing compensation. B. The effect of a compensated price change equals the effect of an uncompensated price change plus the effect of removing compensation. C. The effect of an uncompensated price change equals the effect of an uncompensated price change plus the effect of providing compensation. D. The effect of a compensated price change equals the substitution effect of the price change plus the income effect of the price change.