When the Fed sells bonds in the open market, we can expect the
A) exchange rate to rise and interest rates to fall.
B) exchange rate and interest rates to rise.
C) exchange rate to fall and interest rates to rise.
D) exchange rate and interest rates to fall.
Ans: B) exchange rate and interest rates to rise.
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If the marginal utility of a product exceeds its MC, we would want, on efficiency grounds, to
A. increase production. B. decrease production. C. leave production constant. D. One cannot tell without knowing the price.
Suppose our tastes are homothetic. It is often observed that people become more rigid --- more set in their ways --- as they get older. Can you translate this observation into "economics-speak" by discussing which feature of our tastes is likely the be changing as we get older?
What will be an ideal response?
A Real Option Value is:
a. An option that been deflated by the cost of living index makes it a "real" option. b. An opportunity cost of capital. c. An opportunity to implement cost savings or revenue expansion in a flexible business plan. d. An objective function and a decision rule that comes from it. e. Both a and b.
Suppose the seller of a used car provides unverifiable information about its quality to a prospective buyer. Unverifiability will reduce the cost of formulating a contract
Indicate whether the statement is true or false