An investor wants to invest in the oil industry, but does not know which major companies will produce the greatest return. As a result, the investor buys shares in several oil companies. By buying several companies to reduce risk, the investor is seeking to reduce:
A. Systemic risk
B. The risk premium
C. Idiosyncratic risk
D. Nondiversifiable risk
C. Idiosyncratic risk
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Factory incentives on cell phones have encouraged consumers to upgrade their phones. How does this affect the market for bluetooth headsets?
A) The demand for bluetooth headsets decreases. B) The quantity of bluetooth headsets demanded increases. C) The demand for bluetooth headsets increases. D) The quantity of bluetooth headsets demanded decreases.
A learning curve may be stated as L = A + BN-b where L is the labor per unit and N is the cumulative number of units produced. Learning does not occur when
A) b = 0 B) b = 1 C) b > 0 D) b < 0
If people regard economic fluctuations as temporary,
a. spending will be less sensitive to changes in income, and the multiplier will be larger. b. spending will be less sensitive to changes in income, and the multiplier will be smaller. c. they will be pessimistic about the future. d. spending will be more sensitive to changes in income. e. spending will be independent of changes in income.
Table 5.3National Income Accounts (dollar figures are in billions)Expenditures for consumer goods and services$8,200Exports$1,700Government purchases of goods and services$2,500Social Security taxes$1,900Net investment$1,400Indirect business taxes$1,400Imports$1,900Gross investment$1,800Corporate income taxes$600Personal income taxes$1,500Corporate retained earnings$130Net foreign factor income$100Government transfer payments to households$1600Net interest payments to households$500On the basis of Table 5.3, the value of the income aggregate that is defined as "the amount of output we could consume without reducing our stock of capital" (also known as the net domestic product) is
A. $11,900 billion. B. $12,300 billion. C. $10,700 billion. D. $12,400 billion.