Why did the lowering of real interest rates during the Great Recession not boost investment spending?
What will be an ideal response?
Given an investment demand curve that is linear and down sloping, a drop in real interest rates should have increased the quantity demanded for investment. That inverse relationship, however, between real interest rates and the quantity of investment demanded assumes that other factors do not change. During the Great Recession of 2007–2009, other factors such as a decline in expected returns from investment shifted the investment demand curve downward, thus offsetting the increase in the quantity of investment demanded from a lower real interest rate.
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In the above, which figure(s) show(s) both a positive and a negative relationship between the variables?
A) Figure A B) Figure B C) Figure C D) Figure D E) Figure A, B, and D
A game in which the players explicitly coordinate their decisions to make themselves better off is a
A) cooperative game. B) noncooperative game. C) zero-sum game. D) negative-sum game.
Which of the following would best describe the demand curve faced by a monopoly firm?
A) horizontal line at the market price B) vertical line at the output level C) same as the market demand curve D) same as the perfect competitor's demand curve
In the game theory model of oligopoly,
a. firms will be successful in colluding to raise prices b. one firm raises its prices, and other firms follow suit c. firms will match other firms' price cuts but not their price increases d. firms may attempt to avoid the worst outcome but may achieve a less-than-optimal outcome e. firms never avoid the worst outcome