According to the interest rate effect, as the price level rises,:
A. people feel poorer and buy less.
B. United States products become more expensive and foreigners buy less U.S. goods.
C. interest rates fall, and people buy less.
D. interest rates rise, and people buy less.
Answer: D
You might also like to view...
If enforcement is aimed at buyers of an illegal good, the result will be
A) an increase in the short-run supply of the good. B) a decrease in the short-run supply of the good. C) a decrease in demand for the good. D) an increase in the price of the good.
Suppose a competitive firm is paying a wage of $12 an hour. Assume that labor is the only input. If hiring another worker would increase output by four units per hour, then to maximize profits the firm should
A) layoff some workers. B) not change the number of workers it currently hires. C) hire the extra worker. D) There is not enough information to answer the question.
A kinked demand curve is associated with
a. tit-for-tat behavior b. a dominant firm c. a discontinuous marginal revenue curve d. extreme marginalism e. price leadership
Which of the following most accurately states the economic significance of voluntary exchange? Select one:
a. Goods and services have value because they exist; exchange causes some people to win while others lose. b. Exchange creates value by permitting trading partners to expand total output as the result of specialization and division of labor. c. Exchange moves goods and services from people who value them more to parties who value the goods less. d. Exchange can not create additional value because no new goods or services are produced