As the housing bubble collapsed, the combination of increasing interest rates and pessimism about future economic prospects:
A. increased both consumption and investment spending.
B. decreased both consumption and investment spending.
C. increased consumption and decreased investment spending.
D. decreased consumption and increased investment spending.
Answer: B
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In the short run, a perfectly competitive firm will make an economic profit as long as
A) it maximizes its profit. B) P > AVC. C) P > AFC. D) P > ATC.
What triggers entry in a competitive market? Describe the process that ends further entry
What will be an ideal response?
Employing the New Keynesian concepts of "macroeconomic externality" and "coordination failure":
if nominal aggregate demand and marginal cost fall by the same proportion, society ________ afford to compensate firms for the profit they lose when they ________. A) can, bear the menu costs of changing prices B) can, hold prices constant C) cannot, bear the menu costs of changing prices D) cannot, hold prices constant
Which of the below statements is true?
a. It is efficient to produce beyond the equilibrium output level as long as costs are low. b. The level of output that maximizes the value of an economy's output is found at the intersection of supply and demand in a competitive market. c. Production and exchange is beneficial as long as the demand curve lies below the supply curve. d. Mutually beneficial exchange is mostly harmful unless regulated.