Prior to World War II, the probability that an economic expansion of a given age would end in the next month
A. remained fairly steady as the age of the expansion increased.
B. decreased as the age of the expansion increased.
C. increased as the age of the expansion increased.
D. was not associated with the age of the expansion.
Answer: C
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How should a natural monopoly be regulated under the social interest theory of regulation?
A) by setting price equal to the average cost of production B) by allowing a price that maximizes the profit of the natural monopoly C) by using a marginal cost pricing rule D) by subsidizing other producers to compete with the monopoly E) by using rate of return regulation
International trade based solely on internal scale economies in both countries is likely to be carried out by
A) monopolists in each country. B) a relatively large number of price competing firms. C) a relatively small number of price competing firms. D) a relatively small number of imperfect competitors. E) a large number of oligopolists in each country.
Assume that the price of a futures contract is higher than the price of the underlying security during the delivery period. Arbitrageurs would
A) buy the futures, simultaneously sell the underlying asset, and pocket the price difference. B) sell the futures, simultaneously buy the underlying asset, and pocket the price difference. C) sell the futures, simultaneously sell the underlying asset, and pocket the price difference. D) buy the futures, simultaneously buy the underlying asset, and pocket the price difference.
The leakage and injections approach implies that deficit spending by the government must be financed by
A) private investment less private savings plus net exports. B) private saving less private investment plus net exports. C) the trade deficit must always offset the government deficit. D) B and C.