If market participants have rational expectations, then the best forecast of the price of a stock in the next period is
A) equal to an average of the prices of the stock in previous periods.
B) equal to the price of the stock in the current period.
C) dependent upon all information available in the current period, including, but not limited to, the price of the stock in the current period.
D) dependent on information available in the previous period.
B
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Braun and Evans found that
A) the measured Solow residual varied sharply over the seasons. B) electricity use by producers rises sharply in economic upturns. C) professional forecasters have rational expectations of inflation. D) shocks to fiscal policy are the main source of business cycle fluctuations.
In the futures market, the difference between the price of the futures and the underlying asset is eliminated by
A) speculators. B) hedgers. C) arbitrageurs. D) longs.
It costs a meat-processing company $50,000 to produce 5,000 pounds of steak. The company's cost will be $50,009 if it produces an additional pound of steak. If the company produces 5,001 pounds of steak then
a. its average cost is greater than its marginal cost. b. its average cost and its marginal cost are equal. c. its average cost is less than its marginal cost. d. there is insufficient information to compute average and marginal costs.
A Lorenz curve that becomes less bowed out implies:
A. no change in income distribution. B. a change in income distribution toward more equality. C. an increase in poverty. D. a change in income distribution toward more inequality.