What should happen to the equilibrium interest rate and the corresponding rate of investment if the Fed decreases the discount rate?
A. The equilibrium interest rate and the equilibrium rate of investment should both decrease.
B. The equilibrium interest rate and the equilibrium rate of investment should both increase.
C. The equilibrium interest rate should decrease, and the equilibrium rate of investment should increase.
D. The equilibrium interest rate should increase, and the equilibrium rate of investment should decrease.
Answer: C
You might also like to view...
Canada has nationalized health care, so that everyone, regardless of their ability to pay, has some access to health care
Based on this observation, Canada has decided that "everyone, regardless of their ability to pay" is the answer to what microeconomic question? A) What type of health care will be produced and in what quantity? B) How will health care be produced? C) For whom will health care be produced? D) Why will we offer health care? E) Must we offer health care?
If a firm is experiencing diseconomies of scale, then the long-run average cost curve is
A) falling. B) rising. C) horizontal. D) shifting.