The slope of a nonlinear curve:
A. is constant.
B. is negative.
C. is zero.
D. changes along the curve.
Answer: D
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In the short run, a firm in monopolistic competition produces where P = MC
Indicate whether the statement is true or false
The institutions that bring together savers, borrowers, investors, and insurers in a set of interconnected markets where people trade financial products is called the:
A. financial system. B. money system. C. market for interest rates. D. market for loanable funds.
Which of the following most clearly limits the ability of the commercial banking industry to expand the money supply?
a. the reserve requirements mandated by the Fed b. the number of commercial bank charters issued by the Fed c. the dollar value of the bonds issued by the U.S. Treasury d. the federal funds interest rate that commercial banks pay (and receive) for short-term loanable funds
Suppose that there are two countries (Ireland and Belgium) negotiating the government debt criteria for the Eurozone. Ireland has a high ratio of government debt to GDP; Belgium has a low ratio of debt to GDP. Which country is likely to prefer a higher inflation target?
A) Belgium, because the real value of its government debt will approach zero faster than Ireland's over time B) Ireland, because higher inflation will cause larger absolute reductions in the real value of its government debt than in Belgium C) It makes no difference because high rates of inflation will have proportional effects on the real debt of both countries. D) both, because each wants to see its real government debt decline