One role of the interest rate is to
A. allocate capital to its most efficient uses.
B. discourage saving and encourage current consumption.
C. redistribute income from the wealthy to the poor.
D. reduce the rate of inflation by encouraging government borrowing.
Answer: A
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The decline of output of other domestic auto producers besides Ford, General Motors and Chrysler occurred in the presence, even before 1970, of rising sales of imported cars in the U.S. market
Indicate whether the statement is true or false
When firms leave a perfectly competitive market, then, other things remaining unchanged:
a. the market supply will decrease but the market price will rise. b. both the market supply and the market price will fall. c. both the market demand and the price will increase. d. the market demand will decrease but the market price will rise. e. both the market demand and the market supply will decrease.
Interest is
a. the price paid for early availability of funds. b. the risk of extending a loan. c. an unnecessary premium charged for the use of money. d. the price one must pay when she does not save.
According to John Maynard Keynes, policy makers should respond to a downturn in the business cycle by:
A. Cutting taxes and increasing government spending. B. Cutting taxes and reducing government spending. C. Raising taxes and increasing government spending D. Raising taxes and reducing government spending E. Do nothing because government activism violates Keynes' laissez faire approach.