The demand curve for loanable funds is downward sloping because
a. people save more at higher interest rates.
b. more investments are profitable at low interest rates than at high interest rates.
c. future income is more valuable now at higher interest rates than at low interest rates.
d. usury laws increase the quantity of funds demanded at low interest rates but do not affect the quantity of funds demanded at high interest rates.
b
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
The law of demand states that price and ______________ are _____________ related, ceteris paribus
A) demand; inversely B) quantity demanded; inversely C) demand; directly D) quantity demanded; directly E) ?quantity supplied; directly
A price index is:
A. a comparison of the current price of a market basket to a fixed point of reference. B. a comparison of real GDP in one period relative to another. C. the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period. D. a ratio of real GDP to nominal GDP.
Dynaflex Corp. is considering an investment project that costs $900 today. It expects the project will yield income of $350 at the end of years 1, 2, and 3. If the interest rate is 10%, the firm
A. is just indifferent between undertaking the investment and not. B. should forgo the investment. C. should undertake the investment. D. indeterminate from the given information