Which of the following is the best definition of a stock index?
A. A control the Federal Reserve places on the stock market via margin requirements, whereby the Fed indexes margin requirements to inflation.
B. A mutual fund made up of a group of stocks and sold through a firm such as Vanguard or Fidelity.
C. A category of stocks whose value is indexed to the inflation rate to safeguard the investor against inflation risk.
D. A measure of the prices of a group of stocks, such as the Dow Jones Industrial Average or the S&P 500.
Answer: D
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Marginal cost is calculated for a particular increase in output by
A) dividing the change in total cost by the change in output. B) dividing the total cost by the change in output. C) multiplying the total cost by the change in output. D) multiplying the change in total cost by the change in output.
Suppose Always There Wireless serves 100 high-demand wireless consumers, who each have a monthly demand curve for wireless minutes of QdH = 200 - 100P, and 300 low-demand consumers, who each have a monthly demand curve for wireless minutes of QdL = 100 - 100P, where P is the per-minute price in dollars. The marginal cost is $0.25 per minute. Suppose Always There Wireless charges $0.25 per minute. How many minutes will low-demand consumers purchase?
A. 75 B. 175 C. 200 D. 100
Indifference curves tend to be convex because ________
A) they are bowed inwards toward the origin B) consumers dislike large fluctuations in consumption from one period to the next C) of the gap between real and nominal interest rates D) the marginal rate of substitution exceeds the price effect
Savings accounts pay very low rates of interest. The average return on the stock market is about 10-12%, in the long run. Why would anyone put money into a savings account?
What will be an ideal response?