Southwest Airlines relies on jet fuel to operate its planes. If it chooses to hedge against future changes in fuel prices, what positions (long or short) will it take in the spot and futures markets?
What will be an ideal response?
Southwest will take a short position in the spot market and long position in the futures markets.
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Mrs. Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost. Mrs. Lovejoy is investing in companies that are
A) always going to be profitable. B) productively efficient. C) both productively and allocatively efficient. D) allocatively efficient.
The "interest rate effect" can be described as an increase in the price level that raises the interest rate and chokes off
A) investment and consumption spending. B) government spending. C) government spending and unplanned investment. D) net exports.
In the Keynesian income-expenditure graph, total savings at each level of national income is indicated by
a. the vertical distance between the consumption function and the 45-degree line. b. the slope of the consumption function. c. the horizontal distance between the consumption function and the 45-degree line. d. the slope of the saving function.
Which of the following is least likely to be a problem for monetary policy?
A. The recognition lag. B. The operational lag. C. The administrative lag. D. Cyclical asymmetry.