Regarding government manipulation of the interest rate, all of these statements are correct, except
A. to address business fluctuations, governments may reduce interest rates to induce people to borrow.
B. such manipulations may give little thought to the effects on resource allocation between present and future.
C. economists agree with the concept of using of interest rates to allocate resources among different time periods.
D. generally, the price system reflects public preference between present and future resource allocation.
Answer: C
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The fundamental reason firms outsource is that:
A. low-wage workers in other countries are more productive than are U.S. workers. B. U.S. workers cannot perform the tasks performed by workers in other countries. C. hiring low-wage workers overseas reduces firms' costs. D. outsourcing increases employment overseas.
Governments can make trading easier and more beneficial by:
A. setting quotas. B. limiting private restrictions on trade. C. providing merit goods. D. establishing externalities.
Seignorage is the revenue a government raises by
A) taxation. B) printing money. C) borrowing money. D) charging fees for services.
Which of the following is a problem with government regulation of natural monopolies?
a. creation of excessive profits levels b. reduced incentives to cut costs c. decreased number of firms in the market d. lack of influence from special interest groups