There is a futures contract for the purchase of 1,000 bushels of corn at $3.00 per bushel. At the end of the day when the market price of corn falls to $2.50:
A. nothing happened since no funds are transferred until the settlement date.
B. nothing happens since marked to market adjustments only occur if the market price rises above the contract price.
C. the buyer (long position) needs to transfer $500 to the seller (short position).
D. the seller (long position) needs to transfer $500 to the buyer (short position).
Answer: C
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Refer to Figure 8.1. Holding other variables constant, a decrease in the capital stock will result in a
A) shift from curve D1 to curve D2. B) shift from curve D2 to curve D1. C) movement from point A to point B. D) movement from point B to point A.
A freely floating exchange rate exists when
a. governments set pegs for the exchange rate but occasionally adjust them. b. offshore banks determine the exchange rate. c. supply and demand forces are allowed to determine the rate at which currencies are exchanged for each other. d. governments use international reserves only to influence exchange rates.
The most important reason for the slope of the aggregate-demand curve is that as the price level
a. increases, interest rates increase, and investment decreases. b. increases, interest rates decrease, and investment increases. c. decreases, interest rates increase, and investment increases. d. decreases, interest rates decrease, and investment decreases.
If demand is represented as Qd = 20 - 3P and supply is represented as Qs = 4 + 5P, the equilibrium quantity is
A. 2. B. 3. C. 7. D. 14.