Long-term interest rates are ________ than short-term interest rates because long-term loans are ________ than short-term loans.
Fill in the blank(s) with the appropriate word(s).
higher; riskier
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If the government accelerates money supply growth and enlarges the budget deficit to stimulate aggregate demand, the rational expectations hypothesis indicates that decision makers will:
a. ignore the policy until it exerts an observable impact on prices, output, and employment. b. quickly take steps to adjust their decision making in light of the more expansionary policies. c. be fooled at the outset but eventually adjust their decision making in accordance with the change in policy. d. be unaware that this policy change has been implemented until a higher rate of inflation is observed.
Using the UIP equation, equilibrium in the short run occurs when
a) arbitrage is possible b) the spot rate is such that foreign and domestic investment returns are equalized c) the spot rate and forward rate are equalized d) foreign interest rates and domestic interest rates are equalized
If a perfectly competitive industry is in long-run equilibrium, the price of the product equals the minimum of:
A. marginal cost. B. fixed cost. C. average variable cost. D. average total cost.
A main trading partner with the U.S. is:
A. Saudi Arabia. B. South Africa. C. Russia. D. Mexico.