Higher interest rates caused by an increase in the price level creates:
A. an indirect positive relationship between the price level and investment spending.
B. an indirect negative relationship between the price level and investment spending.
C. the incentive for individuals to spend more on consumption goods.
D. the incentive for firms to invest more in new factories.
Answer: B
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Which of the following is the most accurate description of events when monetary authorities increase the size of commercial banks' excess reserves?
A. A rise in interest rates increases the money supply, causing a decrease in investment spending, output, and employment. B. The money supply is decreased, which increases the interest rate, and causes investment spending, output, and employment to decrease. C. A fall in interest rates decreases the money supply, causing an increase in investment spending, output, and employment. D. The money supply is increased, which decreases the interest rate and causes investment spending, output, and employment to increase.
The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost to the economy of Kaffenia of producing the 300th dozen doughnuts each day?
A) $10.00 per dozen B) $8.00 per dozen C) $6.00 per dozen D) $4.00 per dozen
If marginal product is zero, we know that
A. total output is maximized. B. average product is also zero. C. average product is constant. D. total product is also zero.
In the figure above, if the market is at equilibrium, then the total consumer surplus equals the area ________ and the total producer surplus equals the area ________
A) A; B B) B; C C) C; B D) A; C E) A + B; C