The price of bonds is tied to the interest rate; when one goes up, the other must fall
a. True
b. False
Indicate whether the statement is true or false
True
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"The Big Mac index is The Economist's burger-based measure of whether currencies are over- or undervalued.... [E]xchange rates should eventually adjust to make the price of a basket of goods the same in each country
Our basket contains just one item: the Big Mac hamburger, which is pretty much the same around the world." The Economist, July 28, 2012 Which principle is The Economist relying on when using the Big Mac to value exchange rates? A) interest rate parity B) market price parity C) purchasing power parity D) exchange rate parity
What is a potential drawback of a high degree of redistribution and too much taxation of the wealthy?
a. Discouraging entrepreneurship b. Expanding political and federal power c. Creating a progressive tax system d. Triggering more offshoring of jobs
Whether a good is a luxury or necessity depends on the
a. price of the good. b. preferences of the buyer. c. intrinsic properties of the good. d. scarcity of the good.
Assume that automobiles are a normal good. A decrease in income will
A. move a firm up the marginal revenue product curve of auto workers. B. shift the marginal revenue product curve of auto workers to the left. C. have no effect on the marginal revenue product curve of auto workers. D. shift the marginal revenue product curve of auto workers to the right.