Regarding the effects of a tight monetary policy (higher interest rate) which of the following statements is incorrect ? A) Households , consumption spending will decline since higher interest rates are likely to decrease the value of household's wealth. B) For a household that is not a borrower with an initial level of debt , a rate in interest rates is likely to reduce the household's interest .. and increase its dispesable income. C) The funding costs effect suggests that higher interest rates are more likely to slow down firms' spending and investments. D) Higher interest rates lower the value of firms' assets and lower asset prices make firms' applications for bank loansmore difficult. E) Higher interes rates can draw capital inflows into the domestic economy and lead to a strengtheining of the exchange rate and strengtheining of the exchange rate is likely to affect both costs and revenues of domestic firms,especially those that produce expprts,or those competing with imports.

Regarding the effects of a tight monetary policy (higher interest rate) which of the following statements is incorrect ? A) Households , consumption spending will decline since higher interest rates are likely to decrease the value of household's wealth. B) For a household that is not a borrower with an initial level of debt , a rate in interest rates is likely to reduce the household's interest .. and increase its dispesable income. C) The funding costs effect suggests that higher interest rates are more likely to slow down firms' spending and investments. D) Higher interest rates lower the value of firms' assets and lower asset prices make firms' applications for bank loansmore difficult. E) Higher interes rates can draw capital inflows into the domestic economy and lead to a strengtheining of the exchange rate and strengtheining of the exchange rate is likely to affect both costs and revenues of domestic firms,especially those that produce expprts,or those competing with imports.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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