Why does investment spending rise and fall with the overall level of GDP in the economy?
What will be an ideal response?
If firms believe that GDP will continue to increase into the future, they may want to invest in anticipation of high future demand for their products. Similarly, if GDP falls and firms believe that this will continue into the future, they are less likely to invest, as their expectation of the future seems less lucrative.
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"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the long run in the corn market, what is TRUE if the production of ethanol increases?
A) Existing corn farmers will exit the market and decrease the market price. B) New corn farmers will enter the market and increase the market price. C) Existing corn farmers will exit the market and increase the market price. D) New corn farmers will enter the market and decrease the market price.
The _____ account for about 60 percent of deposit and loan activity in the Eurocurrency market
a. ECUs b. U.S. dollar c. Euroyen d. Euros e. Eurodollars