Index funds are often preferred to other mutual funds because:
A. they have greater liquidity.
B. on average they have lower management fees.
C. they offer greater diversification.
D. they are managed better.
Answer: B
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
According to the text, the probability of an unemployed person finding a job doubles when
A) his unemployment benefits expire. B) the economy enters a recessionary phase. C) his unemployment benefits are extended. D) he is threatened with arrest.
The objections to the Walsh-Healy Act of 1936, which mandated "prevailing wages" in government employment,
(a) concerned the tendency of government wages to undercut those of the private sector. (b) came from the labor unions. (c) held that unemployment would be maintained artificially high. (d) held that payment of prevailing wages would reduce the national debt too slowly.
Given Keynesian assumptions about the shape of the aggregate supply curve and an economy suffering a recession, which of the following is most likely to occur if the Fed pursues expansionary monetary policy?
A. The equilibrium price level and output will both increase until full employment is reached. B. The equilibrium price level and output will both decrease. C. The equilibrium price level will increase but output will stay the same. D. The equilibrium output will increase but the price level will stay the same until full employment is reached.