The asset demand for money is
A. greater at low interest rates, because the opportunity cost of holding money is low.
B. greater at low interest rates, because the opportunity cost of holding money is high.
C. greater at high interest rates as investors can earn more on their investments.
D. lower at low interest rates, because the opportunity cost of holding money is high.
Answer: A
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In comparing the returns on U.S. and German Treasury securities, investors
A) should forecast the future dollar/euro exchange rate. B) may disregard the future dollar/euro exchange rate. C) should assume the future dollar/euro exchange rate is the same as today's. D) should assume the euro will depreciate if the German interest rate is above the U.S. interest rate.
If Slick Shades, a sunglasses manufacturer, merges with Best Lens, a lens manufacturer, and the combined firm is able to reduce the number of accounting departments from two to one, the merger created ________.
A) managerial diseconomies B) technological interdependencies C) synergies D) a hold-up problem
Which of the following is true about the equation of exchange?
a. The equation of exchange can be presented as: M V = P Q b. Velocity represents the average number of times that a dollar is used in purchasing final goods or services in a one-year period. c. If M increases, and V remains constant, then P must rise and/or Q must rise. d. All of the above are true about the equation of exchange.
Duke is a highly skilled negotiator who could work for many law firms. The law firm that hires Duke is able to collect twice as much revenue per hour of Duke's time than it can for any other negotiator in town. The increased revenue will:
A. all go to Duke because, if it didn't, another firm could hire Duke away. B. be split between Duke and the law firm, but how it will be split cannot be determined without more information. C. all go to the law firm because the firm bears the risk of running the business. D. be evenly split between Duke and the law firm to maximize surplus.