A fall in interest rates leads to:
a. an increase in the rental rate on a machine.
b. a decrease in the rental rate on a machine.
c. no change in the rental rate on a machine.
d. a fall in the marginal productivity of capital.
b
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Economists who believe in activist policy making argue that
A) only planned changes in the money supply impact the economy. B) only increases in the minimum wage levels improve economic well-being. C) decreases in aggregate demand definitely impact the economy in the short run. D) decreases in aggregate demand impact the economy only in the short run.
In the New Keynesian model, if there is a decrease in anticipated future total factor productivity, then
A) there should be no change in monetary or fiscal policy. B) the central bank's interest rate target should be increased. C) government spending should fall, and the central bank's interest rate target should rise. D) government spending should increase.