In the classical model, the level of business investment was a function of
a. only the expected profitability of investment projects.
b. only the real interest rate.
c. both the expected profitability of investment projects and the real interest rate.
d. only the nominal interest rate.
d. None of the above
C
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When Homeowner Harry's sold his residence recently, he found that he had more than $20,000 in equity. This equity did NOT come from
A) the use of an interest-only mortgage payment plan. B) the principal portion of his PITI monthly mortgage payments. C) increases in market value of his house due to appreciation and inflation. D) his down payment.
If we look at the value of money in terms of how many units of a good it takes to buy one dollar, then inflation means:
A. it would take fewer goods to buy the same dollar. B. it would take more goods to buy the same dollar. C. the same number of goods would buy fewer dollars. D. it would take fewer dollars to buy the same goods.