If unexpected news raised people's expectations of a corporation's future dividends and price, then before the price changes this corporation's stock would be
a. overvalued, so its price would rise.
b. overvalued, so its price would fall.
c. undervalued, so its price would rise.
d. undervalued, so its price would fall.
c
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Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements. What panel describes what happens in this market when the price of bratwurst falls?
A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
Which of the following policies followed by the Clinton administration were not Keynesian policies?
a. Reducing the budget deficit during a strong expansion. b. Concentrating tax increases on upper income households. c. Attempting to increase government spending in 1992 when the U.S. economy was below its natural rate of output. d. Adjusting capital gains taxes for inflation in order to encourage savings.
When the Fed reduces the discount rate, it is more likely that the economy experiences _________ and the fall in the rate will _____________
a. inflation; decrease the use of open market operations b. inflation; decrease the federal funds rate as well c. recession; increase the federal funds rate as well d. recession; decrease the cost to banks of borrowing from the Fed e. inflation; decrease the cost to banks of borrowing from the Fed
Adverse selection can only occur when there is asymmetric information
a. True b. False Indicate whether the statement is true or false