Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate. What happens to the supply of money (to lend) if the interest rate increases?
A. It increases.
B. It decreases.
C. It does not change.
D. It depends entirely on the interest rate.
Answer: C
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Appendix: Suppose that a private firm wants to go public to give the owners a chance to retire. It follows the lead of the Google IPO by using a modified Vickrey (or uniform price) auction. The owners of the firm plans to sell 1 million shares and hope to raise at least $10 million from the auction. The following bids were submitted. Bob 250,000 shares at $12 Sam 350,000 shares at $13 Mary
300,000 shares at $9 Sue 100,000 shares at $10 Ravi 450,000 shares at $11 a. The market clearing price is $13, and the sellers of the firm get $13 million. b. The market clearing price is $12, and the sellers of the firm get $13 million. c. The market clearing price is $11, and the sellers of the firm get $11 million. d. The market clearing price is $10, and the sellers of the firm get $10 million. e. The market clearing price is $9, and the sellers of the firm get$9 million
The free entry and exit of firms in a competitive price-searcher market guarantees that
a. both economic profits and economic losses can persist in the long run. b. both economic profits and economic losses disappear in the long run. c. economic profits, but not economic losses, can persist in the long run. d. economic losses, but not economic profits, can persist in the long run.
The problem that arises when one person performs a task on behalf of another person is called the lemons problem
a. True b. False Indicate whether the statement is true or false
According to purchasing-power parity theory, the nominal exchange rate between the U.S. and another country should equal the U.S. price level divided by the price level in the foreign country
a. True b. False Indicate whether the statement is true or false