The interest rate effect occurs because a change in interest rates causes a change in the...
The interest rate effect occurs because a change in interest
rates causes a change in the price level.
| a) True |
| b) False |
Homework Answers
Answer :
True
Because a decrease in interest rate causes more people to borrow money at lower rate and which will increase spending and there will be rise in prices.Same increase in Interest rate causes price level to fall.
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The interest rate effect occurs because a change in interest
rates causes a change in the...
questions one and two 1. The interest rate effect, the real balance effect, and the foreign...
questions one and two
1. The interest rate effect, the real balance effect, and the foreign purchases effect suggest that the aggregate demand curve is downward sloping. True or false. A. True B. False 2. As the price level decreases, interest rates fall. Lower interest rates lead to increased household consumption. This is called the interest rate effect. True or false. A. True B. False
Part of the story of the interest rate effect is that a lower price level causes...
Part of the story of the interest rate effect is that a lower price level causes __________ in the demand for credit, which then causes the interest rate to __________. a) a decrease; fall b) a decrease; rise c) an increase; fall d) an increase; rise
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate...
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate profits and security prices. Based on your understanding of the relationship between interest rates and corporate profits and security prices, identify which of the following statements is true and which are false. True False Ststements The higher the interest rate on a firm's debt, the lower will be the firm's profits, all other considerations remaining constant. An increase in the interest rate paid by...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goo...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goods and services that an economy achieves in the long run when unemployment is at its normal rate a. b. The short-run aggregate supply curve slopes upward because nominal wages are slow to adjust to changing economic conditions. When a fall in the U.S. price level causes U.S. interest rates to fall, the real value of the...
The IS curve is downward sloping because a lower interest rate causes an increase in aggregate...
The IS curve is downward sloping because a lower interest rate causes an increase in aggregate expenditure and a higher equilibrium level of real GDP.
1. Which of the following properly describes the interest-rate effect? a. A higher price level leads to higher money demand, higher money demand leads to higher interest rates, and a higher interest rate increases the quantity of goods and serv
1. Which of the following properly describes the interest-rate effect? a. A higher price level leads to higher money demand, higher money demand leads to higher interest rates, and a higher interest rate increases the quantity of goods and services demanded.b. A higher price level leads to higher money demand, higher money demand leads to lower interest rates, and a lower interest rate reduces the quantity of goods and services demanded.c. A lower price level leads to lower money demand, lower...
The exchange rate effect of a price increase is: if the US price level increases, then the Fed increases interest rate i...
The exchange rate effect of a price increase is: if the US price level increases, then the Fed increases interest rate in order to stabilize the price level. As a result US dollar appreciates causing US exports to decreases. a. False b. True If the Fed increases money supply, then: a. the value of money decreases. b. the price level increases. c. Both of the above d. none of the above Which of the following will the Aggregate Demand curve...
True or false? The lower the level of interest rates, the greater a bond's price sensitivity...
True or false? The lower the level of interest rates, the greater a bond's price sensitivity to interest rate changes.
When the price level falls, it causes the real exchange rate to depreciate. This is called...
When the price level falls, it causes the real
exchange rate to depreciate. This is called the
When the price level falls, it causes the real exchange rate to depreciate. This is called the Select one: a. Wealth effect o b. Interest-rate effect o c Open economy effect d. None of the above
the interest rate effect helps explain why a lower price level sill reduce the quanity of...
the interest rate effect helps explain why a lower price level sill reduce the quanity of real goods and services demanded as an economy moves sosn along its aggregate demand curve true or false
questions one and two
1. The interest rate effect, the real balance effect, and the foreign purchases effect suggest that the aggregate demand curve is downward sloping. True or false. A. True B. False 2. As the price level decreases, interest rates fall. Lower interest rates lead to increased household consumption. This is called the interest rate effect. True or false. A. True B. False
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate profits and security prices. Based on your understanding of the relationship between interest rates and corporate profits and security prices, identify which of the following statements is true and which are false. True False Ststements The higher the interest rate on a firm's debt, the lower will be the firm's profits, all other considerations remaining constant. An increase in the interest rate paid by...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goods and services that an economy achieves in the long run when unemployment is at its normal rate a. b. The short-run aggregate supply curve slopes upward because nominal wages are slow to adjust to changing economic conditions. When a fall in the U.S. price level causes U.S. interest rates to fall, the real value of the...
The IS curve is downward sloping because a lower interest rate causes an increase in aggregate expenditure and a higher equilibrium level of real GDP.
When the price level falls, it causes the real
exchange rate to depreciate. This is called the
When the price level falls, it causes the real exchange rate to depreciate. This is called the Select one: a. Wealth effect o b. Interest-rate effect o c Open economy effect d. None of the above
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