For some investment projects, typically large-scale and long-term, such as housing construction or expansion of automobile assembly lines,
a. the interest rate has no influence on the investment decisions
b. investment decisions depend directly on saving by firms in those industries
c. slight changes in the interest rate rarely affect decisions
d. interest charges are an important cost factor
e. autonomous investment varies according to production quotas
D
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When the interest rate falls in the money market, the quantity of money demanded ________ and the quantity of money supplied ________
A) increases; decreases B) decreases; increases C) stays the same; decreases D) increases; stays the same
The level of potential GDP
A) increases as the real rate of interest decreases. B) increases as the real rate of interest increases. C) is unaffected by the real rate of interest. D) is represented on the IS-MP model by a horizontal line at the world real rate of interest.