Which of the following explains why small reductions in interest rates may not lead to an increase in investment spending?
A. Excess capacity gives businesses little incentive to expand production capacity.
B. Banks are eager to make loans at the lower interest rate.
C. Investment demand is elastic with respect to the interest rate.
D. Improved expectations shift the investment demand curve to the right.
Answer: A
Economics
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Suppose there is an increase in the price of steel. We would expect the supply curve for steel beams to
a. shift rightward. b. shift leftward. c. become flatter. d. remain unchanged.
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Which of the following is TRUE of the Federal Reserve System?I.It was established in the early 1980s.II.It serves as the central bank of the United States.
A. I only B. II only C. Both I and II D. Neither I nor II
Economics