Explain Tobin's idea of "Don't put all your eggs in one basket."
What will be an ideal response?
Trade in assets can make both parties better off by allowing them to reduce the riskiness of the return on their wealth. Portfolio diversification occurs when the wealth is divided among a wide spectrum of assets, so the amount of money riding on each individual asset is reduced. Obviously, this diversification needs to be contrasted against the expected returns of the new assets that you are acquiring.
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Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year
When will real GDP per person be greater in Flip than in Flap? A) in 2 years B) in 15 years C) never D) in 10 years
An advantage of proprietorships is
A) the ease with which they can be formed and dissolved. B) their ability to raise large amounts of equity capital. C) the fact that their profits are not taxed. D) the breadth of management expertise that comes from having a board of directors.
Possible causes of an upward-sloping demand curve are:
a. consumers judge the quality of a product based on quality b. consumers judge the quality of a product based on price c. consumers purchase a product based on snob appeal d. a and b are true e. b and c are true
The poverty gap is
A. the percentage of people in households with income under the poverty line. B. that level of income sufficient to provide a family with a minimally adequate standard of living. C. the amount of money the poor must earn from work. D. the total amount of money that would have to be transferred to households in poverty to lift them out of poverty.