As the interest rate increases, the present value of future sums decreases, so firms will find fewer investment projects profitable
a. True
b. False
Indicate whether the statement is true or false
True
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Which of the following is true with regard to the use of countercyclical fiscal policy as a stabilization tool?
What will be an ideal response?
One major reason that economists are concerned about unemployment is that
A. unemployment reduces the size of the labor force. B. the economy is producing less output than if there were full employment. C. unemployment always leads to frictional unemployment. D. unemployment shifts the production possibilities curve outward.
Adverse selection can occur when
A) all persons involved in a transaction have full information. B) one person has information not available to others. C) post-agreement incentives result in workers shirking. D) nobody has any information about a particular product.
Elsie owns a dairy farm and Elmer is a baker. If Elsie trades butter and milk for some of Elmer's pies than: a. Elsie is the only one that gains from the trade
b. Elmer is the only one that gains from the trade. c. Elsie and Elmer are both made better off by the trade. d. Both Elmer and Elsie are made worse off by the trade.