Which of the following statements is most correct?
A. Financial instruments are created to transfer risks that are relatively easy to predict.
B. When a risk is difficult to predict, financial instruments are created to transfer these risks.
C. Financial instruments require certainty of an event to be able to transfer risk.
D. Financial instruments eliminate the risk from uncertainty, they do not transfer it.
Answer: A
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Economists are reluctant to state that price controls are desirable or undesirable because
A) whether the gains from the winners exceed the losses from the losers is not strictly an economic question. B) it is impossible to evaluate the impact on quantity demanded and quantity supplied as a result of price controls. C) sometimes price controls result in increases in economic efficiency and sometimes they result in decreases in economic efficiency. D) economists are reluctant to conduct positive analysis of price controls.
When the growth rate of the money supply is increased, interest rates will fall immediately if the liquidity effect is ________ than the other money supply effects and there is ________ adjustment of expected inflation
A) larger; fast B) larger; slow C) smaller; slow D) smaller; fast
Employment discrimination is a source of
a. economic inefficiency. b. increased economic growth. c. innovation. d. shifting production possibilities. e. All of the above are correct.
The basic purpose of the other-things-equal assumption is to:
A. allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. B. allow one to focus upon micro variables by ignoring macro variables. C. allow one to focus upon macro variables by ignoring micro variables. D. determine whether X causes Y or vice versa.