During the recession phase of the business cycle, business firms become pessimistic about their future earning capacity as do banks. Nominal interest rates fall during recessions. Investment lending could be expected to
A) rise if the change in future earnings is thought to be greater than the change in interest payments.
B) stay the same.
C) fall.
D) fall if the change in future earnings is thought to be greater than the change in interest payments.
D
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Refer to Figure 17-9. A supply shock, such as rising oil prices, would be depicted as a movement from
A) C to B to A. B) C to D to A. C) A to B to C. D) A to D to C. E) C to E to B.
A change in the discount rate is likely to occur
A) after a change in the Treasury bill rate. B) after a change in the Treasury bond rate. C) before a change in the federal funds rate. D) before a change in the inflation rate.
Cleo promises to pay Jacques $1,000 two years from today. If the interest rate is 4 percent, then how much is this future payment worth today?
a. $924.56 b. $931.44 c. $937.87 d. None of the above are correct to the nearest cent.
George is a gift giver and Roger is a gift recipient. George has Roger in his utility function, but Roger does not have George in his utility function. Roger may try to get George to __________________ George's efficient number of gifts to (give)
A) give more gifts to him than B) reduce the number of gifts he receives below C) increase the number of gifts he receives beyond D) a and b E) a and c