In September of 2007, the Federal Reserve Board Open Market Committee voted to lower interest rates for the first time that year. Explain how lower interest rates affect the aggregate demand curve
What will be an ideal response?
Reducing the interest rate lowers the cost of borrowing to firms and to households. As a result, both firms and households will increase expenditures. This increase in expenditures will shift the aggregate demand curve to the right.
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An increase in supply will have what effect on equilibrium price and quantity?
A. Price will increase; quantity will decrease. B. Price will decrease; quantity will increase. C. Both price and quantity will increase. D. Both price and quantity will decrease.
If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of
A) rational ignorance. B) price discrimination. C) price gouging. D) arbitrage.
Which of the following does not contribute to a pro-business climate for investors?
A. Secure property rights. B. Minimal government regulation. C. High tax rates. D. Legalized profit.
The ..., the smaller is the government purchases multiplier
What will be an ideal response?