| 1. The
interest rate is the price charged by the owner to rent money to the borrower. |
Agree
Disagree |
|
| 2. Grocer
Bob's bananas were $1.00 a pound several months ago. He could not sell more than 20
pounds a week. So two months ago Grocer Bob lowered the price to $0.50 per
pound. He sold an average of 100 pounds each week over the following weeks. It
looks like Grocer Bob will now make more profit from banana sales than he has in any
recent period. |
Agree
Disagree |
|
| 3. Grocer Bob
is so smart that he lowered the price of bananas to $0.25 per pound a few weeks ago.
He expected to sell 300 pounds per week. Grocer Bob is a wise businessman because he
understands the concept of lowering prices to entice more buyers into his store. |
Agree
Disagree |
|
| 4. When
Grocer Bob lowered the price of bananas to $0.25 per pound he expected to sell 300
pounds. But Grocer Bob sold only 60 pounds. Perhaps sales fell because people
had less desire for bananas since their appetites got smaller for some unknown reason. |
Agree
Disagree |
|
| 5. When
interest rates were 6% many people borrowed money. When interest
rates dropped to 5% fewer people borrowed money. This may be because fewer people
were optimistic about what they might do with borrowed money to make profits. A
decline in borrowing can precceed and even promote development of a business slow down --
a recession. |
Agree
Disagree |
|
| 6. In this
scenario, interest rates may fall to 4% next. If rates do fall, it will indicate
that there is not enough demand for money to support the 5% price to borrow money. |
Agree
Disagree |
|
| 7. Years ago
many people were willing to pay over 7% to borrow money. They were willing to pay 7%
for the chance to deploy borrowed money to reap an even bigger reward. That
indicates that people were optimistic about the potential profit they could make. |
Agree
Disagree |
|
| 8. If people
feel there is a relatively big risk, they may borrow money, but only at a lower rate. |
Agree
Disagree |
|
| 9. If people
feel there is a relatively low risk, they may be willing to borrow money at higher rates. |
Agree
Disagree |
|
| 10. If there
is a recession, rates will go lower because fewer people will borrow money for cars,
houses, business ventures, and invenstments. |
Agree
Disagree |
|
| 11. If there
is a recession, rates will go lower because fewer consumers will buy products and
services. This implies fewer people will need to be employed manufacturing products
and providing services to those fewer customers. |
Agree
Disagree |
|
| 12. If there
are fewer customers and fewer workers earning wages, the decreased buying power and demand
will lead to lower prices for many products and services. |
Agree
Disagree |
|
| 13. If prices
continue to fall, even fewer people will be working, there will be even fewer potential
customers with even less money to spend. This is deflation. |
Agree
Disagree |
|
| 14. In a
deflationary environment, the demand for investment capital from the stock market is
lower. This implies stock prices may be lower since already issued stock will be in
less demand. |
Agree
Disagree |
|
| 15. This
deflationary process will continue until it reaches a bottom. Then people will
start regain jobs, earn money, start to buy, the economy will grow, and people may again
return to complaining about inflation. |
Agree
Disagree |
|
| 16. I am: |
Female
Male |
|
| 17. My age group
is: |
Under 20
20-29
30-39
40-49
50-59
60-69
70
& older |