Using the supply and demand model, what would happen if foreign investors no longer want to loan money to the United States?
a. Interest rates will decrease, and investment will decrease.
b. Interest rates will increase, and investment will increase.
c. Interest rates will increase, and investment will decrease.
d. Interest rates will decrease, and investment will increase.
c. Interest rates will increase, and investment will decrease.
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The principal-agent view of Fed motivation predicts that the Fed acts
A) to promote the interests of the general public. B) to promote the interests of the Fed's principal—the President of the United States. C) in order to increase its power, influence, and prestige. D) in order to make sure its agents—commercial banks—carry out its wishes.
The "Law of Diminishing Marginal Returns" could also be termed the "Law of Increasing Marginal Costs."
Indicate whether the statement is true or false
A change in the distribution of income that leaves total income constant will not shift the market demand curve for a product providing:
a. everyone has an income elasticity of demand of zero for the product. b. everyone has the same income elasticity of demand for the product. c. individuals have differing income elasticities for the product, but the average income elasticity for income gainers is equal to the average income elasticity for income losers. d. any of the above conditions occur.
A major U.S. motive for negotiating a free-trade agreement with Mexico was
a. to gain increased access to Mexico's huge oil reserves b. to achieve ultimately political union with Mexico c. as a stepping-stone to the formation of a free-trade bloc in the whole Western Hemisphere d. to appease Canada e. to appease GATT