The interest rate effect suggests that
A. an increase in the price level will, reduce interest rates, and therefore reduce consumption and investment spending.
B. an increase in the price level will, increase interest rates, and therefore reduce consumption and investment spending.
C. nominal interest rates do not accurately measure the yield on loans unless adjusted by use of a price index.
D. a decrease in the real interest rate will stimulate consumption and investment spending and therefore inflate the price level.
B. an increase in the price level will, increase interest rates, and therefore reduce consumption and investment spending.
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Refer to the above figure. The figure represents the saving function for the consumer. Point B represents
A) the amount of autonomous consumption. B) the point at which saving equals zero. C) a situation in which saving is negative. D) a situation in which saving is positive.
Using the income approach, an estimate of the value of capital worn out producing GDP is:
a. indirect business taxes. b. capital consumption allowance or depreciation. c. gross private domestic investment. d. capital erosion estimate.