What are the three key features of the financial system that result from the existence of transactions and information costs?
What will be an ideal response?
First, loans from financial intermediaries are the most important external source of funds for small- to medium-sized firms. Second, the stock market is a less important source of external funds to corporations than is the bond market. Third, debt contracts usually require collateral or restrictive covenants.
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Which of the following criteria would make gold a poor medium of exchange?
A) value relative to its weight so that amounts large enough to be useful in trade can be easily transported B) Its value depends on its purity, and its purity is not easy to visibly identify. C) divisibility because different goods are valued differently D) durability so that value is not lost by spoilage
Who decides control of a corporation?
What will be an ideal response?
The existence of positive externalities indicates that the market is producing too many goods
Indicate whether the statement is true or false
Which of the following statements is not correct?
a. Competitive markets tend to limit the impact of discrimination on wages. b. Differences in earnings of whites and blacks or men and women provide clear evidence of discrimination. c. Some differences in earnings are attributable to discrimination based on race, sex, or other factors. d. Profit-maximizing behavior can reduce discriminatory wage differentials.