The Timeline of Production Indicates That

question 125

Multiple Choice

The timeline of production indicates that

• A) supply creates its own investment.
• B) first production occurs,then profit represents a residual,and then this residual is saved.
• C) firms first invest (which is borrowing),then they produce,and then the revenue they receive is used to pay resource suppliers and lenders.
• D) firms first save (which is lending),then they produce,and then the revenue they receive is used to lend even more.
• E) real interest rates rise faster than nominal interest rates because production occurs before income is received by the firm.

---

Definitions:

Terms Of Trade

The ratio at which a country can trade its exports for imports from other countries.

Price Stability

An economic objective aiming to maintain a steady rate of inflation, allowing for predictable planning and investing.

Interest Inelastic

A situation where the demand for or the supply of a good or service does not significantly change in response to changes in interest rates.

Reverend Thomas Malthus

An 18th-century economist known for his theory on population growth, suggesting that population increases geometrically, whereas food supply increases arithmetically, leading to inevitable shortages.