The interest rate effect predicts that higher prices:
a. make it more expensive to borrow, leading to higher interest rates and less investment.
b. make people worse off by reducing the value of their wealth, leading them to save more and spend less.
c. decrease borrowing, leading to higher interest rates and less investment.
d. decrease borrowing, leading to lower interest rates and more investment.
e. increase borrowing, leading to higher interest rates and less investment.
e
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Refer to the scenario above. The opportunity cost per dollar of value added in the production of Good X by worker 1 is ________
A) $0.50 of value added in the production of Good Y B) $100 of value added in the production of Good Y C) $87.50 of value added in the production of Good Y D) $0.70 of value added in the production of Good Y
What is ‘government failure'? How would you draw the line between public and private activity?
What will be an ideal response?