The equilibrium interest rate:
A. allocates the available supply of loanable funds to investment projects that have high
enough rates of return to justify the borrowing.
B. rises when the supply of loanable funds increases.
C. is the price paid for the use of any resource.
D. affects the size of total output but not the composition of that output.
Answer: A
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The efforts of individuals to protect themselves against losses as a result of inflation
A) are irrational because one person's loss as a result of inflation is someone else's gain. B) can only succeed if everyone correctly anticipates the rate and timing of inflation. C) cannot succeed because no private citizen has the ability to stop inflation. D) use up valuable resources that could have been employed in other ways.
Duration is
A) an asset's term to maturity. B) the time until the next interest payment for a coupon bond. C) the average lifetime of a debt security's stream of payments. D) the time between interest payments for a coupon bond.