Higher interest rates lead to lower investment spending.
Answer the following statement true (T) or false (F)
True
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If aggregate planned expenditures are less than real GDP, then
A) inventories increase above their planned levels and businesses increase their production. B) unplanned inventory changes equal zero. C) inventories decrease below their planned levels and businesses increase their production. D) inventories increase above their planned levels and businesses decrease their production. E) there is no equilibrium level of real GDP.
In the above figure, income is $8, the price of a soft drink is $1, and the initial price of a milkshake is $2. If the price of a milkshake decreases to $1, the income effect is the movement from point ________ to point ________
A) a; b B) b; d C) b; c D) a; c
The "accelerator hypothesis" of investment states that a firm's net investment is most closely related to the
A) level of its actual sales. B) change in its actual sales. C) level of its expected sales. D) change in its expected sales.
Noncontrollable expenditures are called "noncontrollable" because
A) they increase at the same rate as the public debt. B) they change without congressional action. C) only the president can approve these entitlement payments. D) the political process determines the size of the payments.