Why is it important to understand the bond market?
What will be an ideal response?
The bond market supports economic activity by enabling the government and corporations to borrow to undertake their projects and it is the market where interest rates are determined.
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If penalties for trading illegal drugs are instituted on both buyers and sellers, the
A) quantity might increase or decrease but the price will rise. B) price might rise or fall, but the quantity will decrease. C) price and the quantity will both decrease. D) price and the quantity will both increase.
For much of its history, General Motors was characterized by having versions of the same car with different nameplates, e.g., Chevrolet vs. Cadillac. This business model has seemed less successful in recent years. What might explain this?
A) Consumers have more information concerning costs and quality. B) Consumers have more information concerning costs but not quality. C) Sellers have more information concerning costs but consumers have more information about quality. D) Consumers have less information concerning costs and quality.
The efficient number of gifts that a gift-giver wants to give is the number at which the marginal benefits of giving a gift are__________________the marginal costs of giving a gift
A) greater than B) less than C) equal to D) less than or equal to
Given AD1 and AS1 in Figure 8.3, the classical approach to achieving full employment at an output of $300 billion would be to
A. Increase the growth of the money supply to shift AD1 to AD2. B. Do nothing and wait for "natural" market forces to achieve full employment. C. Increase taxes and increase government spending to shift AD1 to AD2. D. Use all available supply-side options.