Explain what effect an increase in the future expected interest rate will have on the IS curve and LM curve in the current period
What will be an ideal response?
An increase in the future expected interest rate will cause a reduction in the present value of future disposable income and, therefore, human wealth. This causes current C to decrease and the IS curve to shift left. The increase in the future expected rate will also cause a reduction in the present value of future profits. This will cause a reduction in investment and another leftward shift in the IS curve. The LM curve will not be affected.
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In the fooling model, real wages
A) are countercyclical. B) are procyclical. C) are constant. D) show no clear cyclical pattern.
The marginal fixed cost of a firm:
a. is a positive constant irrespective of output level. b. declines as output is increased because a fixed numerator is divided by an ever-growing denominator. c. generally increases as output is increased. d. is equal to average variable cost and average total cost at their minimum points. e. is always equal to zero and is therefore ignored by economists.
Research seems to suggest that corporate culture
A) is unrelated to stock performance. B) is closely related to stock performance. C) helps determine the cost of capital. D) is easily transferable across organizations.
The legislation which outlawed stock-purchase mergers that would substantially reduce competition was the:
A. Sherman Act. B. Clayton Act. C. Robinson-Patman Act. D. Celler-Kefauver Act.