Spending on the structures, equipment, and software that provide the industrial capacity to produce goods and services for all sectors of the economy is called:
A) inventory investment
B) business fixed investment
C) residential fixed investment
D) consumption
B
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In the money market, in the short run in order to decrease the nominal interest rate, the Fed must
A) increase the discount rate. B) increase the quantity of money. C) decrease the quantity of money. D) decrease the demand for money. E) directly lower the interest rate and not change either the demand for money or the supply of money.
Which of the following forces did Keynes assert had the strongest influence on consumption decisions?
A. Wealth. B. Interest rates. C. Disposable income. D. Prices.
The argument in favor of rational expectations is that
A. people will continue to acquire information as long as the marginal benefit of that information is positive. B. individuals have a very good idea of what to expect from the government in terms of monetary policy but not fiscal policy. C. if expectations were not rational, there would be unexploited profit opportunities available. D. it is costless for individuals and firms to form rational expectations.
Refer to the data provided in Table 17.6 below to answer the following question(s). The table shows the relationship between income and utility for Isabel.Table 17.6 IncomeTotal Utility $00 $40,00020 $80,00050$120,00090$160,000150Refer to Table 17.6. Suppose Isabel has a 25% chance of becoming disabled in any given year. If she does become disabled, she will earn $0. If Isabel does not become disabled, she will earn her usual salary of $160,000. Isabel has the opportunity to purchase disability insurance for $40,000 which will pay her her full salary in the event she becomes disabled. Would Isabel purchase such a policy?
A. yes B. no C. maybe D. indeterminate from the given information