What happens as the interest rate rises?
A. Planned investment spending also rises.
B. The opportunity cost of using retained earnings to finance investment spending rises.
C. Planned investment spending remains constant since it depends on profit projections not interest rates.
D. The number of profitable investment opportunities declines.
Answer: B
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Refer to Figure 13-3. Suppose the economy is at point A. If government spending increases in the economy, where will the eventual long-run equilibrium be?
A) A B) B C) C D) D
When yield curves are steeply upward sloping
A) long-term interest rates are above short-term interest rates. B) short-term interest rates are above long-term interest rates. C) short-term interest rates are about the same as long-term interest rates. D) medium-term interest rates are above both short-term and long-term interest rates.
In this graph, why is there a loss?
a. ATC is equal to D at q*.
b. P* is less than ATC at q*.
c. ATC is more than the MR at q*.
d. P* is equal to D at 0.
In Figure 10.3, a decrease in the supply of labor will cause the equilibrium:
A. wage and hours of labor used to increase. B. wage and hours of labor used to decrease. C. wage to increase and hours of labor used to decrease. D. wage to decrease and hours of labor used to increase.