The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output.
B. government policy.
C. decreasing inflation only.
D. increasing or decreasing inflation.
Answer: D
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The bundling of mortgages together and the issuing of securities for their financing made it possible for investment banks to
a. reduce their exposure to risk in the event that the overall mortgage default rate rose. b. reduce the amount of capital required to back these bundled securities. c. build up large reserves so they would be able to meet their obligations even if the mortgage default rate rose substantially. d. quickly access funds to meet short-term debt obligations.
When Adam's income increases, he purchases more tickets to Broadway musicals than he did before his income increased. For Adam, Broadway musicals are a(n)
a. normal good. b. inferior good that is not a Giffen good. c. Giffen good. d. optimal good.
If you pay a premium of 10 cents per bushel for a Corn put option with a strike price of $6.60, what's the most you can lose?
A. $0.10/bu B. $6.60/bu C. $6.70/bu D. Your potential loss is unlimited
If a local car dealership can sell 8 cars per day at a price of $25,000 each, but must reduce the price to $24,000 to sell one more car, what is the marginal revenue of the 9th car?
A. $216,000. B. $16,000. C. -$1,000. D. $24,000.