The interest rate effect states that an increase in the price level will cause:
a. a decline in the interest rate.
b. a decrease in investment and aggregate expenditures.
c. an increase in the equilibrium level of income.
d. a decrease in the supply of financial assets.
e. an increase in real wealth.
b
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Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioral economists reveal that sunk costs often affect economic decisions. Which of the following could explain this observation?
A) Even though sunk costs cannot be recovered, it has been incurred and therefore should be treated as part of the product's value. B) People measure the value of a good in terms of its purchase price. C) Sunk costs have a higher opportunity cost than costs that can be recovered. D) If consumers maximize their utility, it makes sense to consider the full purchase price of a product in their consumption decisions.
With the followings is NOT one of the reasons why quantitative easing in and of itself will not necessarily be stimulative?
A) Most of the resulting increase in the monetary base just flows into holdings of excess reserves. B) Banks just add to their holdings of excess reserves instead of making loans. C) The asset purchase program involves only the purchase of short-term government securities. D) The asset purchase program involves only the purchase of long-term government securities.
If there is excess demand in the loan able fund market?
A. Interest rates are above equilibrium B. Interest rates are below equilibrium C. Can be expected to rise D. A & C E. B & C
Newcomers will be enticed to enter an oligopolistic market when ______.
a. entry is easy and there is zero long-run economic profit b. entry is easy and there are excess profits c. economies of large-scale production exist d. a cartel agreement is in place that benefits social welfare