Your financial investments consist of U.S. government bonds maturing in twenty years and shares in a start-up internet company. If interest rates on newly-issued government bonds increase, then the price of your bonds will ________ and the price of the shares you own will ________.
A. decrease; not change
B. increase; increase
C. increase; not change
D. decrease; decrease
Answer: D
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From an initial long-run macroeconomic equilibrium, if the Federal Reserve anticipated that next year aggregate demand would grow significantly faster than long-run aggregate supply, then the Federal Reserve would most likely
A) increase interest rates. B) increase income tax rates. C) decrease income tax rates. D) decrease interest rates.
A problem for equity contracts is a particular type of ________ called the ________ problem
A) adverse selection; principal-agent B) moral hazard; principal-agent C) adverse selection; free-rider D) moral hazard; free-rider
A perfectly competitive market is in equilibrium and 50,000 units are being produced. If four firms take over this market and a Cournot oligopoly is formed, what is the new total equilibrium quantity produced?
A) 50,000 B) 60,000 C) 62,500 D) 40,000
What is strategic trade policy? What are the pros and cons of such a policy by a nation in its dealings with other nations?