Economic Influences

Fill in the missing word

impact borrowing costs and savings returns, influencing spending and business profits.

Higher interest rates make borrowing more expensive.

True

False

An appreciation in exchange rates is beneficial for exporters.

True

False

Lower interest rates lead to a decrease in spending and investment.

True

False

Government spending can help boost demand in the economy and benefit businesses.

True

False

Why do central banks sometimes increase interest rates despite lower rates being better for businesses?

Stimulate consumer spending
Encourage investment in the stock market
Boost economic growth
Control inflation

How does the government estimate the average price level of goods and services in an economy?

By conducting a survey of consumer preferences.
By looking at the price of a typical basket of goods and services.
By analyzing the cost of essential goods and services for the wealthy.
By looking at the price of luxury goods and services.

An appreciation in exchange rates is beneficial for exporters as it increases the price of their products in international markets, boosting demand for their exports.

True

False

Inflation at high or volatile levels can be beneficial to businesses due to the uncertainty it creates, leading to an increase in consumer spending and investment decisions.

True

False

A decrease in interest rates leads to increased spending by consumers and businesses, resulting in higher profits for businesses.

True

False

A decrease in interest rates results in an increase in the return from saving, impacting individuals who receive more money in return for saving their money in the bank.

True

False

Government spending increases can boost demand in the economy and benefit businesses by increasing GDP and reducing unemployment.

True

False

How would a sudden appreciation of the Japanese yen against the US dollar affect a US-based company that relies heavily on importing electronic components from Japan for its manufacturing process?

It would decrease the cost of importing electronic components from Japan, leading to lower production costs.
It would increase the cost of importing electronic components from Japan, potentially raising production costs.
It would result in a decrease in the quality of electronic components imported from Japan, affecting the manufacturing process negatively.
It would have no impact on the cost of importing electronic components from Japan, keeping production costs stable.

How would a sudden increase in interest rates affect a small business planning to expand its operations through a loan?

It would have no impact on the cost of borrowing for expansion.
It would increase the cost of borrowing, making expansion more expensive.
It would decrease the interest rates, making expansion more affordable.
It would decrease the cost of borrowing, making expansion cheaper.

If a country's central bank decides to lower interest rates during a period of economic stagnation, what potential impact could this have on consumer behavior and business investment?

It could lead to a decrease in consumer spending and business investment.
It could encourage increased spending and investment.
It may cause a reduction in the country's GDP growth rate.
It might result in a rise in unemployment rates and inflation.