If inflation in Mexico is lower than it is in the United States,
A) the purchasing power of the dollar in buying American goods will rise relative to the peso.
B) the value of the peso will rise in the long run.
C) the value of the dollar will rise in the long run.
D) the purchasing power of the peso in buying Mexican goods will fall relative to the dollar.
B
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Sometimes one observes that the price of a company's stock falls after the announcement of favorable earnings. This phenomenon is
A) clearly inconsistent with the efficient markets hypothesis. B) consistent with the efficient markets hypothesis if the earnings were not as high as anticipated. C) consistent with the efficient markets hypothesis if the earnings were not as low as anticipated. D) consistent with the efficient markets hypothesis if the favorable earnings were expected.
A manager believes there is a 10 percent chance their firm will have to pay $1,000,000 and a 90 percent chance they will be found innocent and pay nothing except the legal fees of $200,000. If the manager is offered a settlement deal of $300,000 (the manager's firm would pay the plaintiff $300,000), and the manager flips a coin to decide if they should settle or not, which of the following
statements is true? A) The manager is risk averse. B) The manager is risk neutral. C) The manager is a risk lover. D) The manager is risk intolerant.
In the knowledge economy
A) physical property rights appear to be lacking. B) property rights have become stronger. C) property rights have been replaced by network externalities. D) intellectual property rights appear to be lacking.
The new Keynesians emphasize the importance of
A) rational expectations. B) sticky wages and prices. C) real causes of the business cycle. D) the monetary growth rule.