What are the relationships among capital, interest rates, and interest income?
What will be an ideal response?
Businesses can either lease capital goods (for example, equipment) to produce products or purchase the capital goods. If they decide to purchase the capital goods, then they often need to borrow the money to make this purchase. The borrowed funds typically come from households who are willing to lend money through the banking system. In return for lending this money households earn interest income. The amount of interest income is determined by the interest rate. This interest rate will be equivalent to the rate charged to lease the capital goods.
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Direct controls often require long legal proceedings before they can be effective
a. True b. False Indicate whether the statement is true or false
According to purchasing-power parity, if the price of a basket of goods in the U.S. rose from $2,000 to $2,104 and the price of the same basket of goods rose from 800 units to 832 units of some other country's currency, then the
a. nominal exchange rate would appreciate. b. nominal exchange rate would depreciate. c. real exchange rate would appreciate. d. real exchange rate would depreciate.
If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A) the money supply and a decrease in interest rates. B) government purchases. C) oil prices. D) taxes.
If the government sets a specific tax and an ad valorem tax so that they raise the same amount of tax revenue, why does the ad valorem tax reduce output less than the specific tax?
What will be an ideal response?