Neoclassical Economic Theory Is Based on Which of the Following

question 10

Multiple Choice

Neoclassical economic theory is based on which of the following assumptions?

• A) The market determines production and consumption levels.
• B) Price is set by supply and demand.
• C) People are rational.
• D) All of the above.

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Definitions:

Excess Reserves

Banking reserves exceeding the reserve requirement set by a central bank, not lent out to the bank's clients.

Interest Rate

The fee, shown as a percent of the original amount, that a borrower must pay to a lender to borrow money or other resources.

Sub-prime Housing Loan

A type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans, often due to a poor credit history.

Prime Rate

The Prime Rate is the interest rate that commercial banks charge their most credit-worthy customers, often used as a benchmark in setting rates for various types of loans.