1. All of the following are consequences of an economy operating above its potential level except:
A. High rates of inflation
B. High interest rates
C. Low unemployment
D. Stable prices
2. A bank can usually offer a saver a higher return for the same risk because:
A. the bank can usually purchase assets at a higher cost than any one saver.
B. the bank can pool the resources of larger savers and purchase lower denominated assets.
C. economies of scale can be applied by the bank in its purchase of assets.
D. None of the above.