When interest rates are low, people often ______.
a. put a bit aside every payday to invest in U.S. Treasury bills
b. invest in long-term savings instruments
c. hang on to their money to make sure they have enough for everyday expenses
d. put more money into their CDs
c. hang on to their money to make sure they have enough for everyday expenses
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The price of a firm's product is $6 and the firm faces a constant marginal cost of $4 that is equal to its (constant) average total cost. If the firm does not sell a unit of its product on the day it was produced, it is sold in a secondary market for a price of $3. If the firm does not sell a unit of its product on the day it was produced, there is a ________ of ________ per unit not sold.
A) loss; $2 B) loss; $1 C) profit; $1 D) profit; $2
Real wealth falls, interest rates rise, and the dollar appreciates as the price level
a) remains constant. b) falls slightly. c) rises. d) falls substantially.
Contractionary monetary policy tends to:
A. raise U.S. prices, make exports cheaper relative to imports, and raise the value of the dollar. B. raise U.S. prices, make exports more expensive relative to imports, and lower the value of the dollar. C. lower U.S. prices, make exports cheaper relative to imports, and raise the value of the dollar. D. lower U.S. prices, make exports more expensive relative to imports, and lower the value of the dollar.
An increase in the quantity of money by the Fed
A) raises the interest rate, decreases investment, and shifts the AD curve rightward. B) lowers the interest rate, decreases investment, and shifts the AD curve rightward. C) lowers the interest rate, increases investment, and shifts the AD curve leftward. D) None of the above answers is correct.