According to the efficient markets hypothesis, who should earn the highest risk-adjusted return on stocks?
A) a financial expert who can devote considerable time to research
B) the average investor who doesn't do too much research
C) someone throwing darts at possible stock picks
D) all of the above should earn the same average return
D
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What do demand and marginal revenue curves look like in monopolistic competition? How do they compare to the demand and marginal revenue curves in perfect competition and monopoly?
What will be an ideal response?
The long-run aggregate supply curve is vertical at $16 trillion but the short-run aggregate supply curve intersects the aggregate demand curve at $17 trillion. We know that
A) the economy is producing below full employment in the short run, and will adjust by hiring more workers, thus decreasing unemployment. B) the price level is too high. The long-run equilibrium will occur with a lower price level. C) adjustments will occur so that the long-run aggregate supply equals $17 trillion. D) adjustments will occur so that the short-run aggregate supply eventually intersects the aggregate demand curve at $16 trillion.
Brandon, an economist, is a believer of the rational expectations school. According to him, which of the following is likely to affect the levels of output and employment in an economy?
a. An expansionary monetary policy, if it is fully anticipated b. A recessionary monetary policy, if it is fully anticipated c. A monetary policy that is unanticipated d. A fiscal policy that is anticipated e. The Fed's announcement of no change in monetary policy
Use the idea of interpersonal comparisons of utility to argue for a progressive income tax system where people in higher income brackets are charged higher tax rates on their extra income.
What will be an ideal response?