The interest rate effect explains that higher prices
a. make it more expensive to borrow, leading to higher interest rates and less investment
b. make people worse off by reducing the value of their wealth, leading them to save more and spend less
c. decrease borrowing, leading to higher interest rates and less investment
d. decrease borrowing, leading to lower interest rates and more investment
e. increase borrowing, leading to higher interest rates and less investment
E
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The price of automobiles has increased sharply lately. As a result, automobile dealers have noticed that: a. demand has increased
b. demand has decreased. c. quantity demanded has increased. d. quantity demanded has decreased.
According to classical macroeconomists, prices adjust ________ to shocks, so the government should ________.
A. rapidly; fight recessions B. rapidly; do little C. slowly; fight recessions D. slowly; do little
Suppose that consumption spending is $3,200 billion, spending on durable goods is $800 billion, and spending on services is $1,800 billion. What does spending on nondurable goods equal?
A. $5,800 billion B. $600 billion C. $2,400 billion D. $3,200 billion E. There is not enough information to answer this question.
Which of the following is false?
A. The federal government's fiscal year begins on October 1. B. The largest federal government purchase of final goods and services is Social Security. C. The corporate income tax is a direct tax.