A government bond is NOT as liquid as cash because the bond
A. cannot be converted to spendable dollars either until it matures or is sold to another investor.
B. can be exchanged only for the goods or services produced by the company that issued the bond.
C. always has a face value less than its actual value.
D. must be exchanged for a stock certificate before it can be converted to spendable funds.
Answer: A
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Possession of information by one party in a financial transaction but not by the other party is
A) symmetric information. B) asymmetric information. C) informational hazard. D) financial intermediation.
Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?
A) A lower real interest rate makes more investment projects profitable. B) Consumers are willing to spend less and hence save more at higher real interest rates. C) Interest rate flexibility in financial markets assures an equilibrium in which saving equals investment. D) All of the above are reasons why the demand for loanable funds is negatively related to the real interest rate.
The above figure shows the market for pizza. The market is in equilibrium. Pizza and tacos are substitutes for consumers. The price of tacos falls. What point represents the most likely new price and quantity?
A. Point A
B. Point B
C. Point C
D. Point D
E. Point E
One explanation for the increase in the natural rate of unemployment in 2010 was a mismatch between the skills of the American labor force and the skills that the modern job market demanded.
Answer the following statement true (T) or false (F)