Which of the following statements is (are) correct? The equilibrium interest rate is the rate that
a. equates the supply of loanable funds with the demand for loanable funds
b. equates new saving with investment plus the bond-financed government surplus
c. equates private savings with investment
d. All of the above
e. None of the above
A
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Normative economics answers the question, "What ought to be?" Positive economics predicts the consequences of alternative actions, answering the questions, "What is?" or "What will be?"
Indicate whether the statement is true or false
Suppose Ann can produce 8 units of a material good (M) or 4 units of a spiritual good (S) in a day, while Ben can produce only 3 Ms or 3 Ss in a day. Both Ben and Ann can potentially produce a larger combination of M and S if
A) Ann produces both M and S and Ben produces neither. B) Ann specializes in M and Ben specializes in S and neither of them trade. C) Ann specializes in S and Ben specializes in M and they exchange with one another. D) Ann specializes in M and Ben specializes in S and they exchange with one another.