A conglomerate occurs when:
A. the products of the merging firms were not related in any manner before the merger.
B. the merger partners were competitors.
C. one firm is a domestic firm, and the other is a foreign company.
D. the firms stood in a buyer-seller relationship before the merger.
Answer: A
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If the economy is above full employment, there is ________ gap, and as the economy adjusts toward full employment, the price level ________
A) a recessionary; rises B) an inflationary; falls C) a recessionary; falls D) an inflationary; does not change E) an inflationary; rises
Using the bathtub analogy to understand what determines the number of unemployed workers, the stock variable is
A) the number of workers finding jobs. B) the number of workers separating from their jobs. C) the number of unemployed workers. D) the number of jobs created or destroyed.
The present discounted value of a future payment will increase when the
A. Risk of nonpayment increases. B. Future payment is moved further into the future. C. Opportunity cost of money increases. D. Interest rate decreases.
Explain why returns on assets compensate for systematic risk but not for idiosyncratic risk.
What will be an ideal response?