Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: In 2001 interest rates dropped to 40-year lows, which decreased the cost of borrowing for consumers. (See Figure 8.6.)
A. A.
B. B.
C. C.
D. D.
Answer: D
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What are the policies usually advocated by supply side economists? How do they justify these proposals?
An economist would argue that global warming is
a. unquestionably a human-generated problem that should be stopped immediately at all costs. b. simply fear mongering, for there is no scientific evidence that the average temperature on earth is changing. c. likely to cause massive starvation as temperatures on earth rise, reducing agricultural productivity. d. a serious issue that may best be addressed primarily by making changes as problems occur in the future.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
For firms that sell one product in a perfectly competitive market, the market price is:
A. constant, regardless of quantity sold. B. equal to marginal revenue for a firm. C. equal to average revenue for a firm. D. All of these are true.