Firms should stop borrowing funds
A. as soon as the bank raises the interest rate.
B. when the MRP of borrowed funds is equal to the cost of borrowing.
C. whenever the future of the firm looks gloomy.
D. if their debts are more than 25 percent of the value of the firm.
Answer: B
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If the money wage rate rises,
A) the AS curve shifts leftward. B) there is a movement down along the AS curve. C) there is neither a movement along or a shift in the AS curve. D) the AS curve shifts rightward. E) there is a movement up along the AS curve.
Under a system of barter
A) each individual trades output directly with another. B) only agricultural goods may be traded. C) goods may be traded for money, but money may not be traded for goods. D) currency is accepted for purchases, but personal checks are not.
An example of a deficit item on the U.S. balance of payments is
A) the sale of a spark plug made by a U.S. firm in Michigan to a Nissan plant in Tennessee. B) the purchase of Japanese yen by a U.S. firm. C) a deposit in a bank in Chicago by the government of Saudi Arabia. D) the payment of a dividend by a British firm to a U.S. family.
In the Keynesian model, if planned investment exceeds planned saving at full-employment output,
a. unemployment is likely to develop. b. government spending may be needed to balance the economy. c. inflation is likely to occur. d. None of these.