The essential feature of the market mechanism is the price signal.
Answer the following statement true (T) or false (F)
True
Prices guide buyers and sellers to achieve an optimal allocation of resources.
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If a firm wants to borrow $10 million and the real interest rate increases from 5 percent to 6 percent, then the cost of the investment has increased by
A) $6 million per year. B) $100,000 per year. C) $1 million per year. D) $600,000 per year. E) nothing because the real interest rate is the return the firm will earn on its investment.
In an English auction
A) the price decreases until someone bids. B) the price increases until nobody else will raise the bid. C) bidders put their bids in a sealed envelope. D) the winning bidder pays the amount bid by the person with the second highest bid.
The wage paid to workers measured in terms of real purchasing power is called the:
A. cost of living. B. minimum wage. C. real wage. D. nominal wage.
Suppose the banking system currently has $300 billion in reserves, the reserve requirement is 5 percent, and excess reserves are $30 billion. What is the level of loans?
a. $270 billion
b. $5,400 billion
c. $6,000 billion
d. $5,100 billion