Consider the AD/AS model. The interest rate effect is reflected on the _______ and when the price level _________________
a. AS curve; rises, people feel poorer and buy less
b. AS curve; rises, goods become more expensive and foreigners buy less
c. AS curve; rises, interest rates fall, and people buy less
d. AD curve; rises, interest rates rise, and people buy less
e. AD curve; falls, interest rates fall, and people buy less
D
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Why is the demand for loanable funds downward sloping?
A) People save less when the interest rate is low. B) More people borrow money when interest rates are low than when they are high. C) Fewer investment projects have returns that can beat higher interest rates, so people are more willing to invest at higher interest rates. D) People save more when the interest rate is high.
________ is a situation in which a good or service is produced at the lowest possible cost
A) Equity B) Allocative efficiency C) Productive efficiency D) Optimal marginalism
How might department stores best protect themselves against the risk of recession?
A) Buy insurance policies that pay off when a recession occurs. B) Stand ready to go out of business if a recession occurs. C) Sell goods that are complements to one another. D) Sell both substitute and complement goods. E) Sell both normal and inferior goods.
Which of the following is FALSE with respect to regulation?
A) Regulated firms commonly try to avoid the effects of regulation whenever they can. B) Firms engage in creative responses which conform to the letter of the law but undermine its spirit. C) Regulation has resulted in state laws that have made creative response illegal in many states. D) Recent regulations have generated feedback effects that undermined the key aim of the rules.