Two basic determinants of investment spending are
A. expected returns and real interest rates.
B. domestic trade and international trade.
C. general price level and the level of output.
D. consumer spending and government spending.
Answer: A
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Refer to Figure 5-9. The efficient output is
A) Q1. B) Q2. C) Q3. D) Q4.
How will the purchase of $100 million of government securities by the Federal Reserve change bank reserves and total checking account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and
firms do not change the amount of currency they hold, and that the required reserve ratio is 20 percent.
When a central bank sells bonds, cash reserves throughout the financial system increase, interest rates fall, and investment spending increases
Indicate whether the statement is true or false
The goal of the firm, according to economists, is to
A) stay in business for as long as possible. B) sell as many units of the good it produces as possible. C) grow as large as possible. D) make as much economic profit as is possible.