Using the liquidity preference framework, show what happens to interest rates during a business cycle recession
What will be an ideal response?
During a business cycle recession, income will fall. This causes the money demand curve to shift to the left. The resulting equilibrium will be at a lower interest rate.
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The opportunity cost of more capital goods today is
A) fewer capital goods in the future. B) fewer consumer goods in the future. C) fewer consumer goods today. D) more unemployed resources in the future.
Which of the following is NOT an important source of revenue for the federal government?
A) individual income taxes B) property taxes C) social insurance taxes and contributions D) corporate income taxes
Michelle Martelle, CEO of Michelle Enterprises, has five projects in hand and is considering which, if any, to undertake. Their expected returns are: project A = 12 percent, project B = 7 percent, project C = 10 percent, project D = 9 percent, and project E = 8 percent. If the interest rate is 8.5 percent, which, if any, investment projects will she accept?
a. Only project A. b. Projects A and C. c. Projects A, C and D. d. Projects A, C, D and E. e. Projects A, B, C, D and E.
Data for an economy show that the unemployment rate is 6 percent, the participation rate 60 percent, and 200 million people 16 years or older are not in the labor force. How many people are employed in this economy?
A. 30 million B. 282 million C. 188 million D. 300 million