The United States sees its overall price level decline, ceteris paribus. Considering this, which of the following actions would most likely happen next?
a. U.S. firms invest more money in bonds and savings accounts, which lowers interest rates.
b. U.S. consumers spend less money, which increases the quantity of real GDP demanded.
c. U.S. firms hold more money to buy goods and services, which raises interest rates.
d. U.S. households borrow more money, which decreases the demand for loanable funds.
a. U.S. firms invest more money in bonds and savings accounts, which lowers interest rates.
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Refer to Scenario 12.1. What will be the price in the long run if the industry is a Cournot duopoly?
A) $400 B) $600 C) $800 D) $900 E) Competition will drive the price to zero.
In England the Thatcher government substituted a "poll tax" for the local property tax. People took strong exception to the tax, which is basically a head or "lump sum" tax. The principle of taxation such a tax violates is called
a. the benefits principle. b. the excess burden principle. c. the ability-to-pay principle. d. the constitutional principle.