Risk premium is
A. the benefits of buying from a trustworthy institution.
B. the additional payment paid by bonds issued by the federal government.
C. the tendency of some investors to incur in high risk.
D. a payment differential necessary to compensate the investor for having to bear a risk.
Answer: D
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Which of the following is an example of a regulatory action?
a. Drivers who exceed the speed limit will pay a fine if caught. b. Automobile manufacturers are required to include built-in infant seats. c. Two firms receive $100,000 fines for engaging in a price-fixing agreement. d. A junk mail solicitor is taken to jail for mail fraud. e. The tobacco industry is required to pay for the hospital bills of a lifelong smoker who develops cancer.
If resources are underemployed, then the economy is producing as much as possible
Indicate whether the statement is true or false
Suppose that opportunity costs in India and Australia are constant. In India, maximum feasible hourly production rates are either 0.3 unit of cloth or 0.2 unit of food. In Australia, maximum feasible hourly production rates are either 0.5 unit of cloth
or 0.5 unit of food. It is correct to state that A) India has a comparative advantage in producing cloth. B) India has a comparative advantage in producing both cloth and wheat. C) India has no comparative advantage in producing cloth or wheat. D) Australia has a comparative advantage in producing cloth.
If the price of a good increases by 5% and the quantity demanded decreases by 5%, then at that price, the good is
A. perfectly inelastic. B. unit elastic. C. elastic. D. inelastic.