Reducing risk through the purchase of assets whose returns do not always move together is
A) diversification.
B) intermediation.
C) intervention.
D) discounting.
A
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If a negative externality exists, __________ in order for the socially optimal output to be reached.
A. supply needs to increase B. supply needs to decrease C. demand needs to increase D. b and c E. none of the above
Based on the conventional view of fiscal policy and potential GDP in the long run, explain what happens to each of the following if the government runs a budget deficit:
a. the supply of loanable funds to the private sector b. long-term real interest rates c. the capital stock d. the investment rate e. potential GDP
For a perfectly competitive market in which firms face an identical constant marginal costs, the amount of consumer surplus increases if
A) market demand decreases. B) market demand increases. C) marginal cost increases. D) none of the above: insufficient information to answer.
Which of the following fiscal policy actions would be appropriate if the economy is experiencing an inflationary gap?
A. an increase in taxes B. an increase in government spending C. an increase in the money supply D. a decrease in interest rates