Arbitrage is:
a. capital controls.
b. interest rate management by the central bank.
c. exploiting profit opportunities in the market resulting from price differences.
d. investing in junk bonds or businesses that are not ethical.
Ans: c. exploiting profit opportunities in the market resulting from price differences.
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Answer the following statement(s) true (T) or false (F)
According to Keynes, the speculative demand for money pertains to money held in anticipation of a(n)
a. increase in bond prices. b. decrease in bond prices. c. rise in interest rates. d. fall in interest rates. e. both b and c
"I'm losing money, but since my fixed costs are so high, I simply cannot afford to shut down." If the firm were attempting to maximize profit, this decision may be: a. correct if price is less than average variable cost
b. incorrect because a firm experiencing economic losses should never continue to operate. c. correct if the firm is covering all of its variable costs. d. incorrect since a firm should shut down whenever price falls below average total cost in the short run.
The property of _____ implies that a consumer always prefers to consume more of either good, holding the consumption of the other good constant
a. monotonicity b. transitivity c. relativity d. reflexivity