Deflation during a recession is of concern to economists because:
A. workers will demand wage increases to offset the effects of deflation.
B. it is generally followed by periods of hyperinflation.
C. the government is powerless to stop it.
D. falling prices lead consumers to delay purchases and further reduce spending.
Answer: D
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The coupon rate on newly issued bonds is usually higher for bonds with ________ terms and ________ risk that the borrower will go bankrupt.
A. shorter; greater B. shorter; smaller C. longer; smaller D. longer; greater
The statement that demand increased means that there is a
a. movement to the right along a demand curve. b. leftward shift of the demand curve. c. rightward shift of the demand curve. d. movement to the left along a demand curve.
Which of the following is the market where reserves can be borrowed by one bank from another bank for very short periods of time?
A. Commercial paper market. B. Money market. C. Foreign exchange market. D. Federal funds market.
As interest rates fall, a firm would
A. be willing to pay more now to purchase the same number of future dollars. B. be willing to pay less now to purchase the same number of future dollars. C. have decreasing present value of expected earning. D. have higher expected costs of investment.