1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
pochemuha
3 years ago
12

Suppose consumption demand of GDP decreases during a recession while the other demands are unaffected. What happens to the equil

ibrium real interest rate in the economy?
Business
1 answer:
julsineya [31]3 years ago
7 0

Answer:

Since consumption represents almost 70% of the GDP, any change in consumption affects the economy more than any change in the rest of the components of the GDP (net exports, investment, government). If consumption decreases, then the real interest rate will decrease.

The higher the interest rate, the lower the consumption level. This should increase the savings = more investment in the economy, but since consumption is so important to the economy, a decrease in consumption will decrease the equilibrium interest rate. This lowering in the real interest rate will be carried out in order to try to increase consumption.

You might be interested in
If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes
Viefleur [7K]

Answer:

C) the industry would more closely approximate pure competition

Explanation:

A monopolistically competitive industry is one with different firms selling similar products that are slightly differentiated. It is very easy for firms to enter into industries that are monopolistically competitive. They also have the autonomy to increase their prices.

If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes they would then resemble a pure competition because they would all be selling identical products which would result in little or no competition.

5 0
3 years ago
Identify a type of market failure. Provide an example of that type of market failure and briefly explain one way that the govern
Rufina [12.5K]

Monopoly power, inefficiency, absent markets, and other factors can all result in market failure. Government is help to reduce the negative effect of that market failure such as implemented taxes and laws. An example of a market failure is music application.

What is market failure?

When we talk about "market failure," we're talking about an economy where there is an inefficient flow of commodities and services on the open market.

Inefficiency, absent markets, insufficient markets, and negative externalities are the main forms of monopoly power. audio player: All listeners hear the song, yet it cannot affect them directly. It is unable to determine whether or not a user has paid.

The government must address market failure issues brought on by additional regulations, taxes, tariffs, subsidies, and trade restrictions.

As a result, monopoly power, inefficiency and missing markets types of market failure. Government implemented taxes and laws. Ex of music app.

Learn more about on market failure, here:

brainly.com/question/13123538

#SPJ1

3 0
2 years ago
Dave is a salaried employee who works in a gas station. He only earns from his job and has no other source of income. He gets a
tigry1 [53]

Answer:

In my opinion the most suitable answer is E. increase his sources of income to show a rise in his income after taxes

Explanation:

The reason is he could lower his expenses too, but for how long? Inflation is going to eat his salary away anyway possibly in 5 to 10 years so what Daventry ustock do is to create another source of income so that he is safe. Possibly through investing in income generating assets, real estate and possibly a side hustle! (A small time business)

5 0
3 years ago
A deductible of $500 requires ( select the correct answer )
kenny6666 [7]

Answer:

ɴᴏ ᴘɪᴄ sᴏʀʀʏ :(( ʙʏᴇ :)))

5 0
2 years ago
Read 2 more answers
Suppose the following transactions occur during the current year:
Genrish500 [490]

Answer:These transactions combines will increase the Gross Domestic Products by +2500

Explanation:

Gross domestic product is the Value of all goods and service produced within the boarders of the country over a period of time. Gross domestic product is measured in monetary terms. Gross domestic product can also be calculated as a total of all expenditures on goods and services in the economy.

we will now sow how these Transactions affect the gross domestic product

1. 50 cases of beer from a dutch distributor at $40 per case

When Dmitri (assuming he is in the United States) Purchases a 50 cases of beer abroad, Imports increase by $2000 ($40 x 50 cases)

Imports have a negative impact on the Gross domestic product, Therefore the Gross domestic product will decrease by $2000

-$2000 imports = -2000 Gross Domestic Product. ceteris pa

2.US Company sells 200 Transistors to a Spanish company at $15 per case

Exports increase Gross domestic product. When a US Company sells 200 transistors to a Spanish Company at a price of $15 per transistor, Exports will increase by $3000. When export increase Gross domestic product will also increase by -$3000 ceteris par

+$3000 export = + 3000 Gross Domestic Product.

3. Jake US Citizen pays $1500 for a laptop he orders from microell (a US company)

This transaction will increase Consumer's domestic consumption which is represent by a Variable denoted by C in the Consumption equation. When Jake pays $1500, Consumption increases by $1500 which also increases Gross domestic Product by $1500 ceteris pa

+$1500 Consumption = + $1500 Gross domestic product

Combined effect of these Transactions

Consumption + Investment + government spending + (export - import)= GDP

+$1500 + 0 + 0 + 0 + ($3000 - $2000) = + $2500        

These transactions combines will increase the Gross Domestic Products by +2500

8 0
3 years ago
Read 2 more answers
Other questions:
  • Is rand corporation a liberal or conservative company?
    14·1 answer
  • All licensees should give earnest money checks to their sponsoring broker immediately who must deposit said earnest money by
    15·1 answer
  • Scholars of peace studies emphasize the __________ level of analysis when recommending strategies for achieving peace.
    15·1 answer
  • Birds Unlimited has an accounts payable period of 60 days. The firm has expected sales of $17,800, $22,100, $24,400 and $28,800,
    15·1 answer
  • Sending employees on international assignments is an example of the _________approach to employee development. Group of answer c
    12·1 answer
  • Mario is a criminal attorney with a private practice. He has been appointed by the court to serve as a defense attorney for an i
    11·1 answer
  • New lithographic equipment, acquired at a cost of $800,000 at the beginning of a fiscal year, has an estimated useful life of fi
    7·1 answer
  • Match the term with its definition Question 2 options: a method of advertising or selling that uses false claims to lure people
    14·1 answer
  • Amy and Hobbes are married and file a joint return. Their three children are 7, 9, and 18 years old. Their modified AGI is $58,0
    12·1 answer
  • nflation, recession, and high interest rates are economic events that are best characterized as being A.factors associated with
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!