According to the textbook, if a wave of pessimism cause stocks to become generally overvalued, the best investment strategy is to
A. sell as many stocks as possible.
B. continue to diversify your investment portfolio.
C. buy only government bonds.
D. hold all available stocks and sell them later.
Answer: B
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The substitution effect of a change in the price of cauliflower is the portion of the change in the quantity of cauliflower demanded that can be attributed to the change in the price of a substitute vegetable such as asparagus
Indicate whether the statement is true or false
Refer to Table 27-1. Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy
If Congress and the president want to keep real GDP at its potential level in 2017, they should A) increase the level of interest rates. B) decrease the money supply. C) decrease government purchases. D) decrease income taxes.
Friedman's theory of money demand differs from Keynes' in that
a. Friedman assumes that the demand for money is highly elastic while Keynes assumes money demand is inelastic. b. Friedman assumes that the money demand function is highly stable while Keynes assumes it is unstable. c. Friedman assumes that there is only a speculative demand for money while Keynes also considers the precautionary and transactionary demands for money. d. Friedman assumes that the proportion of income held in the form of money is constant while Keynes believes it varies. e. both b and d.
Which type of unemployment contributes to the natural rate of unemployment?
A. Real-wage unemployment B. Cyclical unemployment C. Unemployment of government workers. D. All of these contribute to the natural rate.