Firms will borrow to finance capital expansion until the MRP of the investment equals the
A. MRP of labor.
B. marginal cost of the finished good.
C. marginal physical product of capital.
D. interest payment charged for borrowing.
Answer: D
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An extremely severe recession is known as a
A) trough. B) peak. C) contraction. D) depression.
Which of the following policy actions by the Fed would cause the money supply to decrease?
a. An open-market purchase of government securities. b. A decrease in required reserve ratios. c. An increase in the discount rate. d. A decrease in the discount rate.
Over long periods of time, the growth rates of actual and potential GDP have been
A. diverging. B. similar. C. declining together. D. usually far apart.
The three major categories of government spending are
A) government purchases, defense spending, and interest payments. B) defense spending, Medicare and Medicaid, and net interest. C) government purchases, transfer payments, and net interest. D) government purchases, defense spending, and transfer payments