A decrease in business taxes will most likely result in a(n):
a. Decrease in aggregate demand and increase in aggregate supply
b. Decrease in aggregate demand and aggregate supply
c. Increase in aggregate demand and aggregate supply
d. Increase in aggregate demand and decrease in aggregate supply
c. Increase in aggregate demand and aggregate supply
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The interest rate is the price borrowers pay to borrow money. Key interest rates are controlled by the Federal Reserve System. If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to
A. increase. B. decrease. C. not change. D. Uncertain-economic theory has no answer to this question.
Which of the following represents the correct formula for present value?
A) Present value = Payment T periods from now × (1 + interest rate)T B) Present value = Payment T periods from now - (1 + interest rate)T C) Present value = Payment T periods from now + (1 + interest rate)T D) Present value = Payment T periods from now / (1 + interest rate)T
Interest in environmental problems has intensified, perhaps because
A. for the first time in history in the 1970s, people began to die from pollution-related diseases. B. rising incomes have caused people to be more concerned with the quality of their lives. C. the centrally planned economies are polluted. D. decentralized economies are less polluted.
Assume that the central bank sells government securities in the open market. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium
a. The real risk-free interest rate falls and reserve-related (central bank) transactions becomes more negative (or less positive). b. The real risk-free interest rate remains the same and reserve-related (central bank) transactions becomes more negative (or less positive). c. The real risk-free interest rate and reserve-related (central bank) transactions remain the same. d. The real risk-free interest rate rises and reserve-related (central bank) transactions remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.