If firms are more optimistic that future profits will rise and remain strong for the next few years, then
a. investment spending will fall.
b. investment spending will rise.
c. investment spending will remain unaffected.
d. investment spending will rise and then fall.
b. investment spending will rise.
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In an imperfectly competitive labor market, the firm is faced with a(n) ________ MPP curve and a(n) ________ MR curve
A) downward sloping; upward sloping B) downward sloping; downward sloping C) upward sloping; downward sloping D) downward sloping; horizontal
The multiplier effect states that there are additional shifts in aggregate demand from fiscal policy, because it
a. reduces investment and thereby increases consumer spending. b. increases the money supply and thereby reduces interest rates. c. increases income and thereby increases consumer spending. d. decreases income and thereby increases consumer spending.
A lender who wants to avoid the problem of adverse selection could:
A. charge the same average interest rate to all borrowers. B. only lend by issuing credit cards. C. charge a low interest rate and make the applicant prove they warrant the low rate by providing information. D. charge a very high interest rate and assume all loan applicants are high risk.
When actual inflation is less than expected inflation
A) borrowers lose and lenders gain. B) borrowers gain and lenders lose. C) borrowers and lenders both gain. D) borrowers and lenders both lose.