Which interest rates is most relevant in determining aggregate expenditures?
A) federal funds rate
B) short-term real interest rate
C) long-term nominal interest rate
D) long-term real interest rate
D
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Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price. What is the quantity it should produce?
A) 240 units B) 320 units C) 480 units D) 560 units
If firms sell less output than expected, planned investment:
A. is greater than actual investment. B. equals zero. C. is less than actual investment. D. equals actual investment.
Many financial instruments are standardized because:
A. it is believed that most parties to a contract do not read them anyway. B. the standardization of contracts makes them harder to understand. C. it is required by the government. D. complexity is costly, the more complex a contract, the more it costs to create.
For this question, assume that policy makers are pursuing a fixed exchange rate regime. Now suppose that households decide to decrease consumption because of, for example, a reduction in consumer confidence. Given this information, we would expect which of the following to occur?
A) a reduction in the domestic interest rate B) an increase in E C) a reduction in E D) a reduction in investment E) none of the above