Recall the Application about the possible link between interest rates and commodity prices worldwide to answer the following question(s).According to this Application, which is a theoretical explanation for why commodity prices rise with expansionary monetary policy?
A. Lower interest rates raise bond prices, so investors invest less in bonds and more in commodities.
B. Higher interest rates raise bond prices, so investors invest less in bonds and more in commodities.
C. Lower interest rates raise bond prices, so investors invest more in bonds and more in commodities.
D. Lower interest rates lower bond prices, so investors invest less in bonds and more in commodities.
Answer: A
You might also like to view...
How does competition affect entrepreneurs?
A. Raises prices for consumers B. Lowers the cost to produce goods C. Lowers prices for consumers D. Nothing, entrepreneurs do not face competition the same way as businesses
Suppose the market for loanable funds is in equilibrium. If disposable income increases, the equilibrium real interest rate ________ and the quantity of loanable funds ________
A) falls; increases B) falls; decreases C) rises; decreases D) rises; increases
Planned investment is the:
A. amount that firms decide to allocate to inventory accumulation. B. spending households engage in based on forecasted budget. C. investment that a firm decides upon as a result of temporary market changes. D. amount that firms decide to allocate to new capital resources and inventory accumulation.
A period marked by falling wages, falling national output, and rising unemployment is called a recession.
a. true b. false