The same tools that were intended to allocate funds and spread risk more efficiently in the housing market made it:
A. easier to understand the true risk involved with these assets.
B. more difficult to justify buying mortgage-backed securities over other low-risk assets.
C. easier to keep everyone fully informed.
D. more difficult to keep everyone fully informed.
Answer: D
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If the utility function (U) between food (F) and clothing (C) can be represented as U = , the marginal utility of food
A) is not positive. B) does not diminish as food increases. C) is not affected by the amount clothing. D) increases as one obtains more clothing.
In the classical model, a rightward shift in the aggregate demand curve will, in the long run,
A) increase real GDP and the price level. B) increase real GDP and will not change the price level. C) decrease real GDP and will not change the price level. D) not change real GDP and will increase the price level.
Which of the following statements best describes the dangers of a sustained pattern of high budget deficits and high trade deficits?
a. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the inflow of foreign investment capital is not funding short-term portfolio investment in government bonds but instead is funding long-term physical capital investment by firms. b. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the inflow of foreign investment capital is not funding long-term physical capital investment by firms but instead is short-term portfolio investment in government bonds. c. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the outflow of foreign investment capital is from short-term portfolio investment in government bonds and not from long-term physical capital investment by firms. d. A sustained pattern of high budget deficits and high trade deficits becomes dangerous when the inflow of foreign investment capital is funding both long-term physical capital investment by firms and short-term portfolio investment in government bonds.
Which of the following indicates the major difference between monopolists and competitive price searchers?
a. Monopolists will always be able to make economic profit; competitive price searchers will not. b. Barriers to entry are high under monopoly but low in competitive price-searcher markets. c. Monopolists will face a downward-sloping demand curve; competitive price searchers will not. d. Unregulated monopolists will charge prices that exceed marginal cost; competitive price searchers will not.