Suppose We Assume

question 38

Multiple Choice

Suppose we assume Suppose we assume , , ,and the real interest rate rises to ) The economy would A) remain at its long-run equilibrium. B) move from 1 percent below its potential to its longrun equilibrium. C) move from its long-run equilibrium to 1 percent above its potential. D) move from its long-run equilibrium to 1 percent below its potential. E) none of the above
, Suppose we assume , , ,and the real interest rate rises to ) The economy would A) remain at its long-run equilibrium. B) move from 1 percent below its potential to its longrun equilibrium. C) move from its long-run equilibrium to 1 percent above its potential. D) move from its long-run equilibrium to 1 percent below its potential. E) none of the above
, Suppose we assume , , ,and the real interest rate rises to ) The economy would A) remain at its long-run equilibrium. B) move from 1 percent below its potential to its longrun equilibrium. C) move from its long-run equilibrium to 1 percent above its potential. D) move from its long-run equilibrium to 1 percent below its potential. E) none of the above
,and the real interest rate rises to Suppose we assume , , ,and the real interest rate rises to ) The economy would A) remain at its long-run equilibrium. B) move from 1 percent below its potential to its longrun equilibrium. C) move from its long-run equilibrium to 1 percent above its potential. D) move from its long-run equilibrium to 1 percent below its potential. E) none of the above
) The economy would

Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in the valuation of investments.

Time Periods

Distinct intervals of time within which certain activities or events occur or are completed.

Simple Interest

Simple interest is a method of calculating the interest charge on a loan based on the original principal balance without compounding.

Rate of Return

The financial improvement or decline in an investment across a particular period, indicated as a percentage of the investment’s entry cost.