Question Completion with Options:
A. greater investment.
B. All of the above are correct.
C. higher public saving.
D. a higher interest rate.
Answer:
Other things the same, the effects of an increase in transfer payments on the government's budget deficit will lead to
D. a higher interest rate.
Explanation:
When the government is operating a budget deficit, it means that its spendings are more than its tax revenues. It then resorts to issuing treasury bills and bonds to finance the deficit. This naturally reduces the price of bonds and raises interest rates. With rising interest rates, firms and individuals reduce their spending. The cost of borrowing becomes more expensive than before.
P=present value
F=future value=500
n=number of years=2
i=annual interest rate=3%
We have
F=P(1+i)^n
=>
P=F/(1+i)^n
=500/(1.03^2)
= 471.30 to the nearest cent
Answer:0.63; rises
Explanation:
As the price of good X rises from $1.50 to $1.75 the result is a decrease in the quantity demanded of good X from 650 units to 590 units. The price elasticity of demand for good X is _____0.63________ and total revenue _____rises_____ as the price of good X rises from $1.50 to $1.75.
Answer: The aggregate supply curve would shift rightward.
Explanation: When there is a new technological breakthrough that enables a firm to produce at a much lower cost, the aggregate supply curve shifts to the right. During the 1960s Green Revolution when there was improved seeding on basic crops like wheat and rice, by early 1990s, rice and wheat in low-income countries had grown considerably significantly using the Green Revolution seeds; same applies to the harvest that doubled per acre. A technological breakthrough that improves production and reduces production cost would increase aggregate supply - shifts the supply curve to the right - so that more quantity would be produced at any given price.
