Which of the following statements about interest rates is false?
A. Interest rates typically reflect the risk involved in extending a loan
B. Interest rates are affected by households' spending decisions
C. The equilibrium interest rate is determined by the intersection of the supply and demand schedules for loanable funds
D. The supply of loanable funds is independent of the rate of interest
D. The supply of loanable funds is independent of the rate of interest
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There are many excellent substitutes for water in almost all American cities because
A) the demand for water is elastic. B) the demand for water is inelastic. C) the supply of water is limited. D) there are so many alternative drinks readily available in the marketplace. E) water is cheap, and people therefore use it for many different purposes.
A new moving van will increase a moving company's yearly revenue by $15,000 . Its useful life is three years. If the interest rate is 10 percent (0.1) per year, which of the following is the highest price the firm would be willing to pay for the van? Assume that each year's revenue is received at the end of the year. (Answers are rounded to the nearest $100.)
a. $15,000 b. $20,000 c. $37,300 d. $44,100 e. $45,000
If we assume that velocity is constant, and if the money supply increases by 5 percent, we would expect, ceteris paribus, that the price level would
A. increase by 5 percent. B. decrease by 5 percent. C. increase by 1 percent. D. decrease by 1 percent.
The Chairman of the Federal Open Market Committee is also
A) the president of the Federal Reserve Bank of New York. B) the chairman of the Securities and Exchange Commission. C) the chairman of the Federal Deposit Insurance Corporation. D) the chairman of the Board of Governors.