Which of the following are primary functions of a central bank?
I. act as a regulator of banks
II. issue government bonds
III. set monetary policy
IV. regulate dividend payments by corporations
A) I, II, III, and IV
B) I, II, and III
C) I and III
D) I and II
Ans: C) I and III
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The use of the same cost of capital (risk adjusted discount rate) for all capital projects in a corporation
A) is usually the correct procedure. B) is incorrect since different divisions of the corporation may be faced with different levels of risk. C) is incorrect since different capital projects, even in the same division, may be faced with different levels of risk. D) Both B and C
If the price of oil, a close substitute for coal, increases then the
a. supply curve for coal will shift to the right. b. demand curve for coal will shift to the right. c. equilibrium price and quantity of coal will not change. d. demand curve for coal will shift to the left. e. supply curve of coal will shift to the left.
Holding other factors constant, if a change in tax laws discourages people from saving more for retirement, then the real interest rate will ________ and the equilibrium quantity of saving and investment will ________.
A. decrease; increase B. decrease; decrease C. increase; increase D. increase; decrease
The deep recession of 1973-1975 was mainly caused by
A. higher oil prices. B. slower money growth. C. flawed technology that caused a drop in TFP. D. an unexplained drop in business optimism.