23. If the interest rate on a loan a business is looking to take is lower than the expected return from an investment that business expects to make with that loan: a. a rational firm will take out a loan for the investment b. the Federal Reserve will conduct contractionary monetary policy c. a rational firm will not take out a loan for the investment. d. the Federal Reserve will conduct expansionary monetary policy. e. the government will conduct expansionary fiscal policy.
23. If the interest rate on a loan a business is looking to take is lower than the expected return from an investment that business expects to make with that loan: a. a rational firm will take out a loan for the investment b. the Federal Reserve will conduct contractionary monetary policy c. a rational firm will not take out a loan for the investment. d. the Federal Reserve will conduct expansionary monetary policy. e. the government will conduct expansionary fiscal policy.
Chapter27: Issues In Macroeconomic Theory And Policy
Section: Chapter Questions
Problem 6P
Related questions
Question
![23. If the interest rate on a loan a business is looking to take is lower than the expected return from an
investment that business expects to make with that loan:
a. a rational firm will take out a loan for the investment
b. the Federal Reserve will conduct contractionary monetary policy
c. a rational firm will not take out a loan for the investment.
d. the Federal Reserve will conduct expansionary monetary policy.
e. the government will conduct expansionary fiscal policy.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F82466883-07c4-439f-a489-7b2c4202316b%2Fc0870859-6f1c-4e6f-93f4-afb4cc96257c%2Fgg4197k_processed.png&w=3840&q=75)
Transcribed Image Text:23. If the interest rate on a loan a business is looking to take is lower than the expected return from an
investment that business expects to make with that loan:
a. a rational firm will take out a loan for the investment
b. the Federal Reserve will conduct contractionary monetary policy
c. a rational firm will not take out a loan for the investment.
d. the Federal Reserve will conduct expansionary monetary policy.
e. the government will conduct expansionary fiscal policy.
![24. Even with the power to change interest rates, the Fed is unable to directly impact inflation, output or
unemployment. This is because:
a.
Interest rates do not affect inflation, output and unemployment
Interest rates have no influence on the economy
b.
c. Interest rates determine the opportunity cost of spending money today
Inflation, output and unemployment are fixed
d.
e. None of these](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F82466883-07c4-439f-a489-7b2c4202316b%2Fc0870859-6f1c-4e6f-93f4-afb4cc96257c%2F25zumguf_processed.png&w=3840&q=75)
Transcribed Image Text:24. Even with the power to change interest rates, the Fed is unable to directly impact inflation, output or
unemployment. This is because:
a.
Interest rates do not affect inflation, output and unemployment
Interest rates have no influence on the economy
b.
c. Interest rates determine the opportunity cost of spending money today
Inflation, output and unemployment are fixed
d.
e. None of these
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