Consider the effect of business cycles on bondholders versus stockholders. We expect that business cycles will affect:
A. stockholders more since they are residual claimants.
B. bondholders more since the amount they receive depends on profits.
C. bondholders and stockholders about the same.
D. bondholders more since they do not have any claim to property.
Answer: A
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A speculator who takes a long position in a market buys low and sells high, whereas a speculator who taxes a short position in a market buys high and sells low.
Answer the following statement true (T) or false (F)
In the Keynesian model, a decrease in real autonomous spending results in a more than proportional decrease in real Gross Domestic Product (GDP) because
A) consumption decreases as a result of lower real disposable income. B) consumption increases while real disposable income decreases. C) real autonomous spending decreases further as real disposable income decreases. D) government spending also decreases.
Strategic trade policy relies on threats of protectionism to protect free trade
a. True b. False Indicate whether the statement is true or false
A rightward shift in the demand curve for product C might be caused by:
A. a decrease in the price of a product that is complementary to C. B. a decrease in income if C is a normal good. C. an increase in income if C is an inferior good. D. a decrease in the price of a product that is a close substitute for C.