When the credit demand curve is relatively flat:
A) the quantity of credit demanded is relatively sensitive to changes in the real interest rates.
B) the quantity of credit demanded is relatively sensitive to changes in the taxation rates.
C) the quantity of credit demanded is not responsive to changes in the taxation rates.
D) the quantity of credit demanded is not responsive to changes in the real interest rate.
A
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According to the liquidity premium theory
A) investors prefer longer to shorter maturities. B) investors prefer shorter to longer maturities. C) investors are indifferent between short and long maturities. D) investors are more interested in the tax treatment of bonds than they are in the liquidity of bonds.
The president of the United States promises that the nation's economy will simultaneously produce more defense goods without any decreases in the production of other goods. Under which of the following conditions could such a promise be valid?
A) if the United States were producing at a point on its production possibilities curve B) if the United States were producing inside its production possibilities curve C) if the United States were producing to the right of its production possibilities curve D) None of the above; the production possibilities curve must shift to the right.