Classical economists believed that if saving were greater than investment, the interest rate would _____, causing saving to _____ and investment to _____ until the two were equal.
a. rise; decrease; increase
b. fall; decrease; increase
c. fall; increase; decrease
d. rise; increase; decrease
e. fall; increase; increase
Question 2
A farmer grows wheat and sells it to a bakery for 5 . The bakery uses the wheat to bake bread and sells it to a distributor for 20 . The distributor sells the bread to a supermarket for 30, which then sells the bread to customers for 50 . Which of the following is true?
a. The value added by the distributor is 30.
b. The value added by the supermarket is more than that added by the bakery.
c. GDP rises by 50 plus the value added at each stage of production.
d. Counting the value added at each stage instead of counting the final selling price creates a problem of double counting.
e. The value added by the farmer is 20 because the wheat, which is worth 5, is necessary for each of the three remaining stages of production.
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