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They have the same effects on output but investments in technology are<br />
much more closely tied to the level of saving than investments in capital.<br />
They have different effects on output because of the positive externalities<br />
associated with investments in capital.<br />
They have different effects on output because of the positive externalities<br />
associate with investments in technology.<br />
8. The interest rate is the price paid for use of a:<br />
<br />
<br />
<br />
<br />
Real asset.<br />
Financial liability.<br />
Financial asset.<br />
Real liability.<br />
9. If the reserve requirement is 20 percent, <strong>and</strong> banks keep no excess reserves,<br />
an increase in an initial inflow of $100 into the banking system will cause an<br />
increase in the money supply of:<br />
$50<br />
$100<br />
$500<br />
$20<br />
10. Suppose farmers can use their l<strong>and</strong> to grown either wheat or corn. The law of<br />
supply predicts that an increase in the market price of wheat will cause:<br />
<br />
<br />
<br />
<br />
Farmers to substitute wheat for the production of corn.<br />
Farmers to raise the production of corn <strong>and</strong> wheat.<br />
Farmers to lower the production of corn <strong>and</strong> wheat.<br />
Farmers to substitute corn for the production of wheat.<br />
11. According to Keynes, why might deflation create problems for an economy?