-Refer to Figure 14-1

question 55

Multiple Choice

-Refer to Figure 14-1.If the economy is currently at point X,a decrease in the interest rate will

• A) increase the quantity of money demanded (moving the economy toward point B) decrease the quantity of money demanded (moving the economy toward point
• C) increase money demand (shifting the curve toward curve
• D) decrease money demand (shifting the curve toward curve
• E) leave the economy at point X

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Definitions:

Variable Factor

In economics, an input in the production process that can be adjusted in the short run to change the quantity of output.

Fixed Factors

Inputs in the production process that cannot be easily increased or decreased in a short period of time.

Constant Returns To Scale

a situation in production where increasing all inputs by the same percentage results in output increasing by that same percentage.

Long-run Profits

The potential earnings of a business over a period long enough for all inputs to be adjusted, considering the firm's ability to enter or exit markets.