The price of borrowing is known as the:
A. equilibrium price.
B. transaction cost.
C. interest rate.
D. None of these is true.
Answer: C
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The bowed-outward shape of a PPF
A) is due to capital accumulation. B) reflects the unequal application of technology in production. C) illustrates the fact that no opportunity cost is incurred for increasing the production of the good measured on the horizontal axis but it is incurred to increase production of the good measured along the vertical axis. D) is due to the existence of increasing opportunity cost.
In the figure above, assume that output is $10.5 trillion, while potential output is $12 trillion. If there is no policy intervention, we should expect ________
A) rightward shifts of IS & AD, so that both output and inflation rise B) a decrease in inflation to shift the MP curve, raising the real interest rate C) declines in both the inflation rate and the real interest rate as output rises D) a decrease in inflation to shift the AD curve, causing output to rise E) none of the above
Ms. Jones is a professor at a university. She strongly supports the rational expectations theory. She is likely to believe that the only time active policy has an impact on aggregate output is when: a. an expansionary policy is implemented. b. a recessionary policy is implemented. c. policy changes are unannounced
d. the economy has a recessionary gap. e. the economy has an expansionary gap.
The Phillips curve implies a positive relationship between inflation and unemployment.
a. true b. false