Interest rates are positive because inflation makes purchases more expensive in the future than today
Indicate whether the statement is true or false
False. Even if inflation were zero, interest rates would be positive since people prefer present consumption to future consumption.
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Aggregate demand is a ____ rather than a ____
a. fixed number, concept b. schedule, fixed number c. set number, concept d. government aggregate, private aggregate
The exchange-rate effect helps explain what feature in the aggregate demand and aggregate supply model?
An increase in demand for resources fixed or specific to an industry will cause their earnings _____ because those resources cannot be released from other industries.
a. to fall b. to rise by the same rate as for all resources c. to rise disproportionally d. to fall disproportionally
Because prices change too slowly in the short-run and as a result, they do not quickly equalize the quantity demanded and quantity supplied of goods and services, the short-run response of the economy to a demand shock is through:
A) changes in employment but not in output. B) changes in prices rather than through changes in employment. C) changes in output but not in the employment. D) changes in output and employment levels rather than through changes in prices.