Suppose the money market has an equilibrium interest rate of 10 percent. If the actual interest is 8 percent, which of the following occurs to bring the money market back to equilibrium?
A) People buy bonds, the price of bonds rises and the interest rate rises.
B) People buy bonds, the price of bonds falls and the interest rate rises.
C) People sell bonds, the price of bonds rises and the interest rate rises.
D) People sell bonds, the price of bonds falls and the interest rate rises.
D
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Which of these is one of the major reasons for rapid increases in health care spending in the United States?
A. A decrease in the number of malpractices among doctors. B. Advances in medical technology and new prescription drugs are higher cost. C. There are high rates of labor productivity growth in health care.
A student wrote: "When the average product of labor exceeds the marginal product, the marginal product is increasing." If you were the instructor, how would you correct this statement?
What will be an ideal response?
Due to a change in the regulatory structure of a small open economy, the desired capital stock becomes higher for both private investment and government investment
Increased government investment spending is financed by borrowing, not by higher taxes. If both desired investment and government spending rise at the same time, will there be "twin deficits"?
Explain how the market can reduce the incentive for credit-rating firms to take advantage of conflicts of interest
What will be an ideal response?