According to the interest rate effect, when the price falls, the interest rate Orises and the quantity of real GDP demanded increases. is not affected. Orises and the quantity of real GDP demanded decreases. O falls and the quantity of real GDP demanded increases.
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- Which of the following is an effect of a decrease in the interest rate? a. it shifts money demand to the right b. firms decide to purchase new machinery c. decide to decrease residential investment d. foreign citizens decide to buy more Canadian bondsIn the market for loans, suppose that the real interest rate is lower than the equilibrium real interest rate. Saving is Select one: a. greater than investment, and the real interest rate will fall. b. less than investment, and the real interest rate will rise. c. equal to investment, and the real interest rate will rise. d. None of the above.A decrease in the nominal interest rate by 2% and a simultaneous decrease in expectedinflation by 2% will causea. an increase in the real interest rate.b. a reduction in the real interest rate.c. a reduction in investment.d. an increase in investment.e. a decrease in money demand.f. an increase in money demand.g. an increase in the real interest rate and a reduction in investment. Explain..
- When the supply of money increases, what happens to the interest rate? A. the interest rate decreases B. the interest rate increases Thanks z zWhat does this mean? "When drawn against the real interest rate, output supply increases if the labor supply is increasing in the interest rate."Assume the Bank of Canada conducts an open market purchase, which increases real GDP. What happens to the interest rate after both of these effects are taken into account when prices are held fixed? A) there is no change in the interest rate. B) the interest rate rises. C) the interest rate falls. D) the effect on the interest rate is ambiguous the answer was D. PLEASE EXPLAIN AND I WILL GIVE THUMBS UP
- When the price level falls Answer households want to lend more, so the interest rate rises making the quantity of goods and services demanded rise. households want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise. households want to lend more, so the interest rate rises, making the quantity of goods and services demanded fall. None of the above are correct.If the government increases its expenditure on goods and services and as a result, the money wage rate increases, the economy has experienced _______.Suppose the real interest rate is higher than the equilibrium interest rate. We can predict that a. The real interest rate will decrease to encourage investment and discourage saving b. The real interest rate will increase to discourage investment and encourage saving c. The real interest rate will decrease to discourage investment and encourage saving d. The real interest rate will increase to encourage investment and discourage saving
- When the price level falls households want to lend more, so the interest rate rises making the quantity of goods and services demanded rise. households want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise. households want to lend more, so the interest rate rises, making the quantity of goods and services demanded fall. None of the above are correct.Which of the following statement is false? A. Consumption smoothing occurs when people borrow and save to smooth consumption over their lifetime. B. When making decisions about savings and borrowing, households and firms care more about the nominal interest rate than the real interest rate. C. Fisher equation describes the relationship between nominal and real interest rates under the effect of inflation. D. Movement along the demand curve for loanable funds is caused by a change in the interest rate.According to Keynes, when the price level rises, it causes the interest rate to do what? It causes the level of business spending to do what? a. It causes a decrease in the interest rate, as people adjust to higher prices and purchase less; business spending decreases as well. b. It causes a decrease in the interest rate, as people adjust to higher prices and purchase less; business spending goes up. c. It causes an increase in the interest rate, due to greater consumer demand for money to spend; business spending goes up as well. d. It causes an increase in the interest rate, due to a greater consumer demand for money to spend; business spending decreases.
