Which of These Is a Likely Consequence of an Increase

question 67

Multiple Choice

Which of these is a likely consequence of an increase in the price level in the economy,other things constant?

• A)Firms demanding less imported raw materials
• B)Government demanding less military hardware
• C)Foreigners demanding greater amount of U.S.goods
• D)Households demanding more housing and furniture
• E)Firms demanding more capital resources

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Definitions:

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the outstanding loan.

Discounting

The procedure used to calculate the present value of future income, which is inversely related to both the interest rate and the amount of time that passes before the funds are received.