c. the unemployment rate is too low. d. firms often lay off workers due to econo
ID: 1132398 • Letter: C
Question
c. the unemployment rate is too low. d. firms often lay off workers due to economic recession. e. workers often need to update their skills 13. Which combination of events could have caused the equilibrium interest rate to rise and the equilibrium quantity of loanable funds (both borrowed and lent) to fall? a. People become more focused on the future, and governments run larger deficits. b. A baby boom begins, and investor confidence falls c. A baby boom begins, and people become less focused on the future. d. People have lower time preferences, and capital is more productive. e. A baby boom begins, and investor confidence rises. 14. If the interest rate on a loan is higher than the expected return from an investment, a. the Federal Reserve will conduct contractionary monetary policy b. a rational firm will not take out a loan for the investment. c. a rational firm will take out a loan for the investment. d. the Federal Reserve will conduct expansionary monetary policy. e. the government will conduct expansionary fiscal policy Table I. Consider the following data, which shows the quantities and prices of two goods produced in the economy Quantity produced Price S20 $2 1 million spinner 15. Refer to Table 1. Assuming steak dinners and fidget spinners are the only two goods produced in the economy, what is the value of the gross domestic product (GDP)? a. $30 million b. $5 million c. $10 million d. $22 million e. $20 million 16. Suppose a hurricane destroys 20 percent of the capital stock in a country. In the long run, output will and the price level will e. decrease; remain unchangedExplanation / Answer
Answer :
13:
B. A baby boom begins, and investor confidence falls
Because if boom begins that means inflation is increasing which will lead to increase in the interest rate and due to high interest rates loans will become costly for investors so their confidence will reduce which will decrease quantity of loanable funds.
14:
B. A rational firm will not take a loan for investment
Because if the interest is high and the returns on the investment will be less then the investment will not be beneficial for the firm and firm will suffer losses so a rational firm will not do this investment.
15: value of GDP:
A: $ 30 million
GDP means sum of all goods and services produced in a country within a given period of time. Here economy is producing only 2 goods steak dinner and fidget spinner so the GDP will be their sum and value of GDP will be:
Steak dinner = 1 million * price $20 = $ 20 million
Fidget spinner = 5 million * price $2 =$10 million
Value of GDP= $20 million + $10 million = $30 million
16: in the long run :
C: remain unchanged, increases
The capital loss due to hurricane will decrease the output in the short term and demand will increase which will result in higher prices and increase in production to fulfill the demand for output it will initially increase the output for equilibrium point but the increase in prices will reduce the demand so does the output and in the long run the output will remain unchanged and price will increase
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