What is the price of investment? How are they related? What has to be done to increase investment?
The real interest rate is the price of investment. Interest rate and investment are negatively related. Because businesses often borrow to finance their investments, and the real interest rate indicates how much firm must pay for that privilege. The lower the real rate of interest, the more investment spending there will be. An investment project that looks unattractive at an interest rate of 10 percent may look highly profitable if the firm has to pay only 6 percent. The most obvious way to increase investment by private businesses is to lower real interest rates.
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Explain why environmental damage would be classified as an externality.
What will be an ideal response?
The amount of money that a bank must keep on hand per dollar of deposits is called
A) the discount rate. B) the quick ratio. C) the multiplier. D) the reserve requirement.
Which of the following professionals is most likely to generate the income of a superstar?
a. the best teacher b. the best dentist c. the best guitar player d. the best airplane pilot
ItemBillions of DollarsCheckable Deposits$597Small Time Deposits818Currency639Money-Market Mutual Funds Held by Businesses1,045Savings Deposits, Including Money-Market Deposit Accounts2,866Money-Market Mutual Funds Held by Individuals979 Refer to the above table. The size of the M2 money supply is:
A. $2696 billion. B. $2054 billion. C. $5899 billion. D. $6792 billion.