Monetary policy actions by the Fed are:
A. More effective in a restrictive direction than they are in an expansionary direction
B. More effective in an expansionary direction than they are in a restrictive direction
C. Equally effective in both expansionary and restrictive directions
D. Only effective when coupled with fiscal policy actions
A. More effective in a restrictive direction than they are in an expansionary direction
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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.
Labor costs account for approximately ________ of total production costs.
A. three-fourths B. half C. one-fourth D. one-third