Refer to the figure above. What is the equilibrium rate of interest when the credit demand curve is CD2 and the credit supply curve is CS1?
A) 3% B) 4% C) 5% D) 2%
C
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Suppose a mechanic uses $150,000 of his own money to start a business. The rate of interest he could earn in a savings account is 5 percent, and the rate of interest he could earn by investing in bonds is 8 percent. What is the opportunity cost of capital when the mechanic uses his money to start his own business?
a. $7,500/year b. $8,000/year c. $19,500/year d. $12,000/year e. $150,000/year
The purpose of open-market operations is to
a. finance government spending. b. influence the flow of credit and money. c. ensure the safety of deposits in the commercial banks. d. support the value of Federal Reserve notes.
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Regulation in the labor market is not necessarily undesirable, but should be subject to the:
A. principle of comparative advantage. B. principle of increasing opportunity cost. C. cost-benefit principle. D. scarcity principle.