Suppose that the following table represents all of the possible investments in the economy. If the nominal interest rate is six percent, what is the total amount of investment in the economy? (Note: The Returns are for one period later.)
Investment Cost Returns
A $100 $105
B 300 321
C 200 216
D 50 55
E 400 416
At an interest rate of six percent, projects B, C and D are still worthwhile. So there will be $550 worth of investment in the economy.
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Which of the following backs our money supply?
a. The words "This note is legal tender." b. The faith in the government c. The faith that people will take it in exchange for goods and services d. Precious metals
In 2008, the Fed utilized expansionary monetary policy which was made
a. more effective as banks held more excess reserves. b. less effective as banks held more excess reserves. c. more effective as banks held less excess reserves. d. less effective as banks held less excess reserves.
The formula for the multiplier can be written as change in
a. Y/change in I. b. I/change in Y. c. Y/change in C. d. Y/change in GDP.
____________are generally associated with labor and raw materials.
Fill in the blank(s) with the appropriate word(s).