Diversification of a portfolio
a. can eliminate market risk, but it cannot eliminate firm-specific risk.
b. can eliminate firm-specific risk, but it cannot eliminate market risk.
c. increases the portfolio's standard deviation.
d. is not necessary for a person who is risk averse.
b
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The idea that if governments cut taxes but not spending, people will not change their behavior, and expansionary policy will have little expansionary effect is known as:
A. Ricardian equivalence. B. Keynesian policy. C. the invisible hand. D. Stimulus policy.
When making income comparisons across countries, economists generally prefer to use
a. the exchange rate conversion method. b. the consumer price index ratio method. c. the purchasing power parity method. d. the interest rate differential conversion method.
Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be
A) an increase in the price of coffee. B) a decrease in the price of coffee. C) a rightward shift in the demand curve for coffee. D) a leftward shift of the supply curve of coffee.
Some poor countries appear to be falling behind rather than catching up with rich countries. Which of the following could explain the failure of a poor country to catch up?
a. The poor country has a health epidemic such as the Zika virus b. The poor country imposes heavy tariffs to protect infant industries c. The poor country has many corrupt officials d. All of the above