Which among the following statements is not true when there is an increase in interest rate in an economy? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Which among the following statements is not true when there is an increase in interest rate in an economy? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return
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(4) increase in capital return Explanation: Interest rate increase the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
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Which among the following statements is not true when there is an increase in interest rate in an economy ? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Description : Which among the following statements is not true when there is an increase in interest rate in an economy ? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Last Answer : increase in capital return

Which from the following is not true when the interest rate in the economy goes up? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Description : Which from the following is not true when the interest rate in the economy goes up? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Last Answer : (4) Return on capital increases Explanation: The interest rate is the cost of demanding or borrowing loanable funds. Alternatively, the interest rate is the rate of return from supplying or lending loanable funds. ... rate per unit of time, which is why it is called the rate of return on capital.

Which from the following is not true when the interest rate in the economy goes up ? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Description : Which from the following is not true when the interest rate in the economy goes up ? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Last Answer : Return on capital increases

Which among (he following is not the outcome of decrease in prime lending rate? (1) to raise the bank loan (2) decline in saving rate (3) decline in productivity (4) increased demand of consumer products

Description : Which among (he following is not the outcome of decrease in prime lending rate? (1) to raise the bank loan (2) decline in saving rate (3) decline in productivity (4) increased demand of consumer products

Last Answer : (3) decline in productivity Explanation: Prime rate or prime lending rate is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate ... falls to meet the new lower demand. Less output requires fewer worker, driving unemployment higher.

Which among the following is not the outcome of decrease in prime lending rate ? (1) to raise the bank loan (2) decline in saving rate (3) decline in productivity (4) increased demand of consumer products

Description : Which among the following is not the outcome of decrease in prime lending rate ? (1) to raise the bank loan (2) decline in saving rate (3) decline in productivity (4) increased demand of consumer products

Last Answer :  decline in productivity

Lower interest rates are likely to (a) Decrease consumption. (b) Increase cost of borrowing. © Encourage saving. (d) Increase borrowing and spending.

Description : Lower interest rates are likely to (a) Decrease consumption. (b) Increase cost of borrowing. © Encourage saving. (d) Increase borrowing and spending.

Last Answer : (d) Increase borrowing and spending.

Demand pull inflation may be caused by (a) An increase in cost (b) A decrease in interest rate © A reduction in government spending (d) An outward shift of aggregate supply.

Description : Demand pull inflation may be caused by (a) An increase in cost (b) A decrease in interest rate © A reduction in government spending (d) An outward shift of aggregate supply.

Last Answer : (b) A decrease in interest rate

Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Description : Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Last Answer : (3) Liquidity preference Explanation: According to the classical view, rate of interest is determined by the interaction of supply of and demand for capital. Thus this theory is popularly called ... higher shall be the rate of interest. The liquidity preference constitutes the demand for money.

Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Description : Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Last Answer : (4) Commercial Banks Explanation: Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.

'Marginal efficiency of capital' is - (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Description : 'Marginal efficiency of capital' is - (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Last Answer : (1) expected rate of return on new investment Explanation: The volume of investment depend upon the following two factors: (1) rate of interest: and (2) marginal efficiency of capital. Before ... partly on expectations of future yields and partly on the actual price of the capital good concerned.

Rate of interest is determined by (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Description : Rate of interest is determined by (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Last Answer : Liquidity preference

‘Marginal efficiency of capital’ is (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Description : ‘Marginal efficiency of capital’ is (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Last Answer :  expected rate of return on new investment

According to the classical system, saving is a function of - (1) Income (2) The interest rate (3) The real wage (4) The Price level

Description : According to the classical system, saving is a function of - (1) Income (2) The interest rate (3) The real wage (4) The Price level

Last Answer : (1) Income Explanation: Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.

According to Acceleration principle investment depends on change in the level of------ (a) rate of interest. (b) level of income. © price (d) saving.

Description : According to Acceleration principle investment depends on change in the level of------ (a) rate of interest. (b) level of income. © price (d) saving.

Last Answer : (b) level of income.

According to the classical system, saving is a function of (1) Income (2) The interest rate (3) The real wage (4) The Price level

Description : According to the classical system, saving is a function of (1) Income (2) The interest rate (3) The real wage (4) The Price level

Last Answer : Income

Cost of production of the producer is given by: (1) sum of wages paid to labourers. (2) sum of wages and interest paid on capital. (3) sum of wages, interest, rent and supernormal profit. (4) sum of wages, interest, rent and normal profit.

Description : Cost of production of the producer is given by: (1) sum of wages paid to labourers. (2) sum of wages and interest paid on capital. (3) sum of wages, interest, rent and supernormal profit. (4) sum of wages, interest, rent and normal profit.

Last Answer : (4) sum of wages, interest, rent and normal profit. Explanation: The following elements are included in the cost of production: (1) Purchase of raw machinery, (2) Installation of plant and machinery ... also added, (k) The normal profit of the entrepreneur is also included In the cost of production.

Cost of production of the producer is given by: (1) sum of wages paid to labourers. (2) sum of wages and interest paid on capital. (3) sum of wages, interest, rent and supernormal profit. (4) sum of wages, interest, rent and normal profit.

Description : Cost of production of the producer is given by: (1) sum of wages paid to labourers. (2) sum of wages and interest paid on capital. (3) sum of wages, interest, rent and supernormal profit. (4) sum of wages, interest, rent and normal profit.

Last Answer : sum of wages, interest, rent and normal profit.

Why do we allow the Federal Reserve loan money to commercial banks at almost 0% interest, who then loan the tax payers this money at a much higher interest rate?

Description : Why do we allow the Federal Reserve loan money to commercial banks at almost 0% interest, who then loan the tax payers this money at a much higher interest rate?

Last Answer : If you want to learn more about the Federal Reserve system and how it works, start with Wikipedia and then, for fun, consider asking targeted questions of the conspiracy theorists here on Fluther. ... takes something of yours. Interest happens when you choose to pay for the opportunity to borrow.

Economies of a firm are : (1) An increase in its profits (2) A reduction in its selling expenses (3) Its dominance of the market (4) Saving in it's production costs

Description : Economies of a firm are : (1) An increase in its profits (2) A reduction in its selling expenses (3) Its dominance of the market (4) Saving in it's production costs

Last Answer : (4) Saving in it's production costs Explanation: Economics of a firm includes how it combines labour and capital so as to lower the average cost of output, either from increasing, decreasing, or constant returns ... of a good or a service on a larger scale, yet with (on average) less input costs.

Economies of a firm are : (1) An increase in its profits (2) A reduction in its selling expenses (3) Its dominance of the market (4) Saving in it’s production costs

Description : Economies of a firm are : (1) An increase in its profits (2) A reduction in its selling expenses (3) Its dominance of the market (4) Saving in it’s production costs 

Last Answer : Saving in it’s production costs

The internal rate of return - (1) must be less than the interest rate if the firm is to in-vest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm's in-vestment.

Description : The internal rate of return - (1) must be less than the interest rate if the firm is to in-vest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm's in-vestment.

Last Answer : (3) falls as the annual yield of an investment rises. Explanation: The internal rate of return on an investment or project is the "annualized effective compounded re-turn rate" or discount rate ... the investment equals the net present value of the benefits (positive cash flows) of the investment.

As the number of investments made by a firm increases, its internal rate of return - (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall, ceteris paribus. (3) increases to compensate the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Description : As the number of investments made by a firm increases, its internal rate of return - (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will ... the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Last Answer : (3) increases to compensate the firm for the current consumption foregone. Explanation: Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a ... of return is greater than an established minimum acceptable rate of return or cost of capital.

The internal rate of return (1) must be less than the interest rate if the firm is to invest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm’s investment.

Description : The internal rate of return (1) must be less than the interest rate if the firm is to invest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm’s investment. 

Last Answer : falls as the annual yield of an investment rises.

As the number of investments made by a firm increases, its internal rate of return (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall, ceteris paribus. (3) increases to compensate the firm for the current consumption foregone. (4) increases because the level of savings will fall.

Description : As the number of investments made by a firm increases, its internal rate of return (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall ... firm for the current consumption foregone. (4) increases because the level of savings will fall.

Last Answer :  increases to compensate the firm for the current consumption foregone.

Given the money wages, if the price level in an economy increases, then the real wages will - (1) increase (2) decrease (3) remain constant (4) become flexible

Description : Given the money wages, if the price level in an economy increases, then the real wages will - (1) increase (2) decrease (3) remain constant (4) become flexible

Last Answer : (2) decrease Explanation: If workers receive a higher nominal wage and the price level does not change, then the real purchasing power of their wages is higher and they are inclined to increase the quantity of labor supplied.

Given the money wages, if the price level in an economy increases, then the real wages will (1) increase (2) decrease (3) remain constant (4) become flexible

Description : Given the money wages, if the price level in an economy increases, then the real wages will (1) increase (2) decrease (3) remain constant (4) become flexible

Last Answer : decrease

How the interest-level of a country is affected by FDI? (1) increases (2) decreases (3) remains unaffected (4) there is increase or decrease

Description : How the interest-level of a country is affected by FDI? (1) increases (2) decreases (3) remains unaffected (4) there is increase or decrease

Last Answer : (2) decreases Explanation: A higher international interest rate will decrease FDI since it means a higher cost of fund in international market, and vice versa. Interest rate is a measure of the cost of capital ... to a decrease in FDI. Interest rate and FDI can both be the cause and effect of other.

.An increases in investment is most likely to be caused by (a) Lower interest rates (b) Expectations of lower national incomes © A decrease in the marginal propensity to consume (d) An increase in withdrawals.

Description : .An increases in investment is most likely to be caused by (a) Lower interest rates (b) Expectations of lower national incomes © A decrease in the marginal propensity to consume (d) An increase in withdrawals.

Last Answer : (a) Lower interest rates

An increase in investment is caused by (a) Lower interest rates (b) Expectations of lower national income © A decrease in the marginal propensity to consume (d) An increase in withdrawals

Description : An increase in investment is caused by (a) Lower interest rates (b) Expectations of lower national income © A decrease in the marginal propensity to consume (d) An increase in withdrawals

Last Answer : (a) Lower interest rates

How the interest-level of a country is affected by FDI ? (1) increases (2) decreases (3) remains unaffected (4) there is increase or decrease

Description : How the interest-level of a country is affected by FDI ? (1) increases (2) decreases (3) remains unaffected (4) there is increase or decrease

Last Answer : decreases

Capital formation in an economy depends on - (1) Total Income (2) Tot al demand (3) Total savings (4) Total production

Description : Capital formation in an economy depends on - (1) Total Income (2) Tot al demand (3) Total savings (4) Total production

Last Answer : (3) Total savings Explanation: Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. ... a measure of the amount by which the total physical capital stock increased during an accounting period.

Capacity utilization - (1) is usually near 100 percent. (2) represents the percent of the labour force that is employed. (3) is a measure of the proportional of the existing capital stock used for current production. (4) rises as the economy moves into a recession, since firms must replace unemployed workers with some other resources to maintain production.

Description : Capacity utilization - (1) is usually near 100 percent. (2) represents the percent of the labour force that is employed. (3) is a measure of the proportional of the existing capital ... into a recession, since firms must replace unemployed workers with some other resources to maintain production.

Last Answer : (3) is a measure of the proportional of the existing capital stock used for current production. Explanation: Capacity utilisation refers to the extent or level to which the productive capacity of a ... as a percentage, it is computed by dividing the total capacity with the portion being utilized.

Capital formation in an economy depends on (1) Total Income (2) Total demand (3) Total savings (4) Total production

Description : Capital formation in an economy depends on (1) Total Income (2) Total demand (3) Total savings (4) Total production

Last Answer : Total savings

Capacity utilisation (1) is usually near 100 percent. (2) represents the percent of the labour force that is employed. (3) is a measure of the proportional of the existing capital stock used for current production. (4) rises as the economy moves into a recession, since firms must replace unemployed workers with some other resources to maintain production.

Description : Capacity utilisation (1) is usually near 100 percent. (2) represents the percent of the labour force that is employed. (3) is a measure of the proportional of the existing capital ... into a recession, since firms must replace unemployed workers with some other resources to maintain production.

Last Answer : is a measure of the proportional of the existing capital stock used for current production.

Which of the following is true to Euler’s theorem of factor pricing ? (a) Constant return to scale (b) Static and risk free economy (c) Perfect competition (d) All of the above

Description : Which of the following is true to Euler’s theorem of factor pricing ? (a) Constant return to scale (b) Static and risk free economy (c) Perfect competition (d) All of the above

Last Answer : (d) All of the above

Enterpreneurial ability is a special kind of labour that - (1) is hired out to firms at high wages (2) organizes the process of production (3) produces new capital goods to earn interest (4) manages to avoid losses by continual innovation

Description : Enterpreneurial ability is a special kind of labour that - (1) is hired out to firms at high wages (2) organizes the process of production (3) produces new capital goods to earn interest (4) manages to avoid losses by continual innovation

Last Answer : (2) organizes the process of production Explanation: In economics, factors of production are the inputs to the production process. Factors of production' may also refer specifically to the 'primary factors', ... the other factors of production, land, labor, and capital, in order to make a profit.

Enterpreneurial ability is a special kind of labour that (1) is hired out to firms at high wages (2) organizes the process of production (3) produces new capital goods to earn interest (4) manages to avoid losses by continual innovation

Description : Enterpreneurial ability is a special kind of labour that (1) is hired out to firms at high wages (2) organizes the process of production (3) produces new capital goods to earn interest (4) manages to avoid losses by continual innovation

Last Answer : organizes the process of production

Consider the following statements and identify the right ones. i. Higher level of capital-output ratio indicates efficient use of capital. ii. It reflects the productivity of capital in the economy a. I only b. ii onlyc. bothd. none

Description : Consider the following statements and identify the right ones. i. Higher level of capital-output ratio indicates efficient use of capital. ii. It reflects the productivity of capital in the economy a. I only b. ii only c. both d. none

Last Answer : d. none View Answer /

An economy is in equilibrium when - (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended saving equals intended investment (4) intended investment exceeds intended savings

Description : An economy is in equilibrium when - (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended saving equals intended investment (4) intended investment exceeds intended savings

Last Answer : (3) intended saving equals intended investment Explanation: In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences ... and intended investment. An economy is in equilibrium when total savings equal total investment.

An economy is in equili-brium when (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended investment equals intended investment (4) intended investment exceeds intended savings

Description : An economy is in equili-brium when (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended investment equals intended investment (4) intended investment exceeds intended savings

Last Answer : intended investment equals intended investment

Cheap money means - (1) Low rates of interest (2) Low level of saving (3) Low level of income (4) Low level of standard of livtrig

Description : Cheap money means - (1) Low rates of interest (2) Low level of saving (3) Low level of income (4) Low level of standard of livtrig

Last Answer : (1) Low rates of interest Explanation: Cheap money is a loan or credit with a low interest rate, or the setting of low interest rates by a central bank like the Federal Reserve. ... funds, CDs and bonds. Cheap money can have detrimental economic consequences as borrowers take on excessive leverage.

Which one of the following statements is correct concerning the weighted average cost of capital (WACC)? a) The WACC may decrease as a firm's debt-equity ratio increases. b) In the computation of WACC, weight assigned to the preferred stock is based on the coupon rate multiplied by the par value of the stock. c) A firm's WACC will decrease as the corporate tax rate decreases. d) The weight of the common stock used in the computation of the WACC is based on the number of shares outstanding multiplied by the book value per share.

Description : Which one of the following statements is correct concerning the weighted average cost of capital (WACC)? a) The WACC may decrease as a firm's debt-equity ratio increases. b) In the computation of ... of the WACC is based on the number of shares outstanding multiplied by the book value per share.

Last Answer : a) The WACC may decrease as a firm's debt-equity ratio increases.

Which of the following explains the term economic growth? a. Increase in per capita production b. Increase in per capita real income c. structural change in the economy d. all the above are right

Description : Which of the following explains the term economic growth? a. Increase in per capita production b. Increase in per capita real income c. structural change in the economy d. all the above are right

Last Answer : d. all the above are right There is no single definition that can define the term economic growth. However, there are various indicators that explain the term

“Crowding out” means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a government budget deficit raises interest rates and causes investment spending to fall d. a government budget deficit raises American exports and lowers American imports

Description : Crowding out means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a government ... spending to fall d. a government budget deficit raises American exports and lowers American imports

Last Answer : c. a government budget deficit raises interest rates and causes investment spending to fall

10. “Crowding out” means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a government budget deficit raises interest rates and causes investment spending to fall d. a government budget deficit raises American exports and lowers American imports

Description : 10. Crowding out means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a ... investment spending to fall d. a government budget deficit raises American exports and lowers American imports

Last Answer : c. a government budget deficit raises interest rates and causes investment spending to fall

If a firm is operating at loss in the shortperiod in perfect combination, it should : (1) decrease the production and the price. (2) increase the production and the price (3) continue to operate as long as it covers even the variable costs. (4) shut-down and leave the industry

Description : If a firm is operating at loss in the shortperiod in perfect combination, it should : (1) decrease the production and the price. (2) increase the production and the price (3) continue to operate as long as it covers even the variable costs. (4) shut-down and leave the industry

Last Answer : (3) continue to operate as long as it covers even the variable costs. Explanation: The demand for labour is "derived- from the production and demand for the product being demanded. If the demand ... price and production numbers are met. Labour is "derived" from the market demand for the product.

Inflation is caused by - (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Description : Inflation is caused by - (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Last Answer : (1) increase in money supply and decrease in production Explanation: Economists generally agree that in the long run, inflation is caused by increases in the money supply. According to the theory of ... few goods. The increase in money supply is not matched by the equivalent production of goods.

Inflation is caused by (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Description : Inflation is caused by (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Last Answer :  increase in money supply and decrease in production

If a firm is operating at loss in the short-period in perfect combination, it should : (1) decrease the production and the price. (2) increase the production and the price (3) continue to operate as long as it covers even the variable costs. (4) shut-down and leave the industry

Description : If a firm is operating at loss in the short-period in perfect combination, it should : (1) decrease the production and the price. (2) increase the production and the price (3) continue to operate as long as it covers even the variable costs. (4) shut-down and leave the industry

Last Answer : continue to operate as long as it covers even the variable costs.

)A very high rise in National Income at current market prices and a low rise at constant prices reveals - (1) the high rate of growth in the economy at the current period (2) the increased production in the current period (3) the improper growth of the economy (4) the high rate of inflation prevailing in the economy

Description : )A very high rise in National Income at current market prices and a low rise at constant prices reveals - (1) the high rate of growth in the economy at the current period (2) the increased ... period (3) the improper growth of the economy (4) the high rate of inflation prevailing in the economy

Last Answer : (3) the improper growth of the economy Explanation: When national output is multiplied by present ruling price, we obtain national income at current prices. On the other hand if the national output is ... not indicate increase in product or output, but is rather due to the rise in price level.