The equilibrium interest rate:
A. affects both the size of total output and its composition.
B. falls when the demand for loanable funds increases.
C. determines the composition of R&D spending but not its total amount.
D. increases when the expected rate of return on R&D spending falls.
Answer: A
You might also like to view...
A nation's gross domestic product (GDP) ________.
A. is always some amount less than its net domestic product B. can be found by summing C + I + G + NX C. is the dollar value of the total output produced by its citizens, regardless of where they are living D. can be found by summing C + S + G + NX
Assume the economy is in a recession and the Federal government decides to cut personal income tax rates. All else equal, the cut in tax rates should
A) increase consumption expenditures and cause real GDP to increase relative to potential GDP. B) increase the nominal interest rate and cause potential GDP to increase relative to real GDP. C) decrease the real interest rate and decrease expectations of inflation. D) increase the target interest rate and cause real GDP to fall relative to potential GDP.
The average productivity of capital is defined as the ratio of total capital employed to the total output produced
a. the extra output produced by employing one more unit of capital while holding other inputs constant. b. the extra output produced by employing one more unit of capital while allowing other inputs to vary. c. the ratio of total output produced to the quantity of capital employed. d.
Over long periods of time, the growth rates of actual and potential GDP have been
A. diverging. B. similar. C. declining together. D. usually far apart.