After identifying one combination of interest rates and GDP for which the demand for money is equal to the supply of money (equilibrium), to maintain the equilibrium if GDP rises:
A) this would not affect interest rates.
B) interest rates would have to fall.
C) interest rates would have to rise.
D) interest rates would not be in parity with foreign rates of interest.
Answer: C) interest rates would have to rise.
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The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. The price of a slice of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend
Which combination of pizza and Pepsi will maximize Priscilla's utility? A) 3 slices of pizza B) 2 slices of pizza and 2 cans of Pepsi C) 3 cans of Pepsi and 1 slice of pizza D) 1 slice of pizza and 3 cans of Pepsi
Which one of the following describes the current state of economic development in the United States?
A) The United States is running out of natural resources, and therefore it will soon experience a drop in the rate of economic growth. B) Employment is declining in the manufacturing sector and growing in the service sector. C) Employment is declining in the manufacturing sector and growing in the agricultural sector. D) The lack of well-defined property rights in the United States means that entrepreneurs do not expect to capture the benefits of innovations they bring to the marketplace.
When the Fed conducts open market operations, the impact of the buying or selling of bonds will include changes in
A) SRAS. B) interest rates. C) LRAS. D) a and b E) a, b and c
In the diagram, at $10 million of R&D expenditure, the:
A. expected rate of return exceeds the interest-rate cost of funds.
B. firm is spending an optimal amount on R&D.
C. interest-rate cost of funds exceeds the expected rate of return.
D. marginal benefit of R&D is less than the marginal cost of R&D.