When the home construction industry does poorly due to a recession, this is an example of:
A. risk premium.
B. unique risk.
C. idiosyncratic risk.
D. systematic risk.
Answer: D
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Figure 4.4 illustrates the supply of tacos. An increase in the number of Mexican food producers would most likely cause a movement from
A) point a to point c. B) point c to point a. C) S0 to S2. D) S2 to S0.
Which of the following would NOT be a sign that China wants to become a high technology producer?
A) More patents are being sought and granted in China B) Large spending on infrastructure C) Rapid expansion of science, engineering and research D) Less emphasis on education spending
Flexible exchange rates exist when
A) no one knows what the true value of a currency is. B) governments and central banks spend foreign reserves to prop up an exchange rate at a certain level. C) exchange rates are determined by forces of supply and demand. D) speculators bet that a currency will soon be depreciated.
For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
a. The relevant time horizon is short. b. The good is a necessity. c. The market for the good is broadly defined. d. There are many close substitutes for this good.