Interest rates perform the function of
A) signaling information about the inflation rate.
B) allocating funds, but only in the consumer sector.
C) allocating funds, which determines the allocation of physical capital.
D) rewarding those who save but has no direct allocative role.
Answer: C
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The short-run aggregate supply line is:
A. upward sloping. B. downward sloping. C. horizontal at the current rate of inflation. D. vertical at the economy's potential output.
In Walnut Creek, California, there are three very popular supermarkets: Safeway, Whole Foods, and Lunardi's. While Safeway remains open twenty-four hours a day, Whole Foods and Lunardi's close at 9 pm. Which of the following statements is true?
A) Safeway can ignore the pricing decisions of the other two supermarkets. B) Safeway is a monopoly all day because it produces a service that has no close substitutes. C) Safeway has a monopoly at midnight but not during the day. D) Safeway probably has a higher markup to compensate for its higher cost of production.
Which of the following is an objective of macroeconomic stabilization?
(a) eliminating current account deficits. (b) controlling inflation. (c) restoring fiscal balance. (d) all of the above.
Production indifference curves generally have a positive slope.
Answer the following statement true (T) or false (F)