According to the classical model shown in Figure 4.1, an autonomous decline in investment shifts the investment schedule to the left. Furthermore, the equilibrium interest rate declines. Distance B describes an interest rate induced
a. decline in saving, which is an equal increase in consumption.
b. increase in investment.
c. decrease in investment.
d. decline in saving, which exceeds the increase in consumption.
B
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The mutual interdependence of oligopolists ensures that each oligopolist has
A) a unique demand curve. B) a perfectly elastic demand curve. C) a reaction function. D) a fundamental dilemma about whether to collude or not.
What is always TRUE about the short-run equilibrium position for a firm in perfect competition?
A) MR = MC = P = ATC = AR B) TR = TC C) MR = MC = P = AR D) MC = ATC
Answer the following statement true (T) or false (F)
1) Elasticity of resource demand is measured by dividing "percentage change in resource price" by "percentage change in resource quantity." 2) An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources. 3) The marginal productivity theory of income distribution holds that all resources are paid according to their marginal contribution to society's output. 4) The marginal productivity theory of income distribution holds that all resources are paid according to their marginal contribution to society's output.
Refer to the graph above. If the interest rate rises from 2 percent to 3 percent, the supply of money must have:
Increased by $50 billion Decreased by $150 billion Decreased by $100 billion Decreased by $50 billion