If the interest rate dropped, what would be the effect on spending?
a. Spending on automobiles would decrease.
b. Business spending on new capital would decrease.
c. Spending on consumer durables would decrease.
d. Business spending on new factories would increase.
e. Spending on new homes would decrease.
D
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An inflationary gap is the amount by which
A) total planned production exceeds total planned real expenditures in the long run. B) the short-run equilibrium level of nominal GDP is above the short-run level of real GDP. C) the short-run equilibrium level of nominal GDP is below the short-run level of real GDP. D) the short-run equilibrium level of real GDP is above the full-employment level of real GDP.
Matty and Rudy are the same age, live in the same town, and hold similar jobs a similar distance from their respective homes. They are so similar, in fact, that to the insurance company, they look the same and are offered the same insurance options. However, Matty has never been a particularly good driver and so buys a lot of auto insurance. Rudy, on the other hand, takes pride in being an excellent driver and so only carries the minimum insurance required. This example illustrates the potential for :
A. risk pooling. B. risk aversion. C. adverse selection. D. diversification.
Which of the following entities actually executes open-market operations?
a. the Board of Governors b. the New York Federal Reserve Bank c. the Federal Open Market Committee d. the Open Market Committees of the regional Federal Reserve Banks
The following economy produces two products.ProductsProduction Possibilities?ABCDEFSteel012345Wheat100907555300Refer to the above table. In moving from possibility A to F, the cost of a unit of steel in terms of a unit of wheat:
A. remains constant. B. increases. C. decreases. D. increases from A to B, and decreases from B to F.