Show, using a supply and demand diagram, why we would expect a stronger economy to result in higher interest rates.
What will be an ideal response?
When the economy is stronger, many firms experience a rising demand for their output. Therefore, businesses expect to make more money from investments they make in their factories or offices. If firms expect a higher rate of return from expanding their business, they will be more likely to want to borrow to fund that expansion. This increases the demand for loans, pushing the demand curve to the right and raising the equilibrium interest rate. Refer to Figure 13.1 for an illustration.
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Use the figure below to answer the following question.
At equilibrium, producer surplus is
A. 300. B. 150. C. 200. D. 400.
To reduce our dependence on foreign oil, policy makers must realize that the cross-price elasticity sign for gasoline and fossil fuel-burning cars is negative.
Answer the following statement true (T) or false (F)
A monopolist maximizes profits by setting the quantity where:
A. marginal revenue is equal to marginal cost. B. marginal revenue is greater than marginal cost. C. marginal revenue is less than marginal cost. D. total revenue is as high as possible.
The Baker Plan emphasized renewed commercial bank loans as a way to restart capital flows to Latin America
Indicate whether the statement is true or false