For this question, assume that there is perfect arbitrage in the stock market. Given this assumption, economists believe that
A) movements in stock prices can be easily predicted.
B) movements in stock prices are largely unpredictable.
C) most stocks will diverge from their fundamental value.
D) stocks will generally earn a lower rate of return than bonds.
E) the rate of return on stocks will be equal to the rate of return on bonds.
B
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If the GDP deflator is less than 100, which will be higher: nominal GDP or real GDP? Why?
What will be an ideal response?
The European Union is seen as a less than optimal currency area because
A) of a lack of labor mobility and fiscal integration. B) of a lack of fiscal integration and capital mobility. C) of disagreements over fiscal policy and trade restrictions. D) of the national identity lost with the euro.
The main reason why the traditional classical school ceased to be widely accepted was that: a. it did not reflect the realities of the modern economy. b. when Keynes received the Nobel Prize, the academic establishment started believinghis ideas
c. it could not explain the persistence of the high levels of unemployment seen during the Great Depression. d. it was too abstract to be completely understood. e. it could not explain the relationship between inflation and unemployment.
Which of the following, if successful, always results in a complete cessation of trade in a certain product?
a. an import quota b. an embargo c. a trading bloc d. a voluntary restraint agreement