Explain the rapid rise in popularity of mutual funds.
What will be an ideal response?
The chapter covered the topic of spreading risk and one of the ways for an individual investor to spread risk is to purchase many different financial assets. The problem for any one individual is it could be expensive, both in terms of absolute dollars but also in transaction costs to purchase many different assets. Mutual funds allow individuals to pool their funds and purchase many different assets, thereby achieving most of the benefits of diversification without requiring a lot of funds to invest or high transaction costs.
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Monetarists argue that aggregate demand is
A) vertical. B) horizontal. C) relatively unaffected by autonomous spending shifts. D) relatively unaffected by changes in the money supply.
If a nation's level of military expenditures is just below the optimal level _____
a. the nation's borders will be unprotected b. the nation will not be protecting its interests abroad c. the nation will not be projecting economic force d. it is unclear what the marginal cost will be
In the long run in a perfectly competitive market:
A. firms earn positive economic profits. B. firms operate at an efficient scale. C. supply is perfectly inelastic when all firms have the same cost structure. D. All of these are true.
Average product of labor is calculated as
A. (total product) x (total units of labor). B. (marginal product) / (total product). C. (total units of labor) / (total product). D. (total product) / (total units of labor).