Which of the following best describes the "interest rate effect"?
A) An increase in the price level lowers the interest rate and chokes off investment and consumption spending.
B) An increase in the price level lowers the interest rate and chokes off government spending.
C) An increase in the price level raises the interest rate and chokes off government spending.
D) An increase in the price level raises the interest rate and chokes off investment and consumption spending.
D
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If the capital-labor ratio equals 1.5 in the steady state, depreciation equals 20, and dilution equals 10, investment per worker equals
A) 15. B) 20. C) 30. D) 45.
If the income elasticity for lobster is 0.6, a 25 percent increase in income will lead to a:
A. 15 percent increase in demand for lobster. B. 2.4 percent increase in demand for lobster. C. 6 percent drop in demand for lobster. D. 42 percent increase in demand for lobster.