Which of the Following Statements Is True

question 36

Multiple Choice

Which of the following statements is true?

• A) Interest rates are directly related to the price of old or existing bonds.
• B) The monetarist transmission mechanism is indirect whereas the Keynesian transmission mechanism is direct.
• C) The interest rate is the opportunity cost of holding money.
• D) a and b
• E) a,b and c

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Definitions:

Command System

A method of organizing an economy in which property resources are publicly owned and government uses central economic planning to direct and coordinate economic activities; socialism; communism. Compare with market system.

Central Planning

An economic system where the government or a central authority makes all decisions about the production and allocation of goods and services.

Economic Profits

The surplus generated when total revenues exceed the total costs (including both explicit and implicit costs) of production, reflecting a return beyond the normal profit level.

Total Costs

The combined total of expenses related to the generation of goods or services, integrating both unchanging and adjustable costs.