People who claim to have the ability to accurately predict the future prices of stocks:
A. are strong advocates of the theory of efficient markets.
B. are always psychologists.
C. should be looked at with skepticism, unless they have information not available to others.
D. are unusually lucky, and should be listened to intently.
Answer: C
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Banks use credit rationing rather than simply raising the interest rate charged borrowers with higher default risks because
A) of fear of adverse selection problems. B) of interest rate ceilings in many states. C) of fear of offending the loan applicants. D) use of credit rationing is encouraged by the Federal Reserve.
In economic terminology, the accumulated training and education that workers receive to increase their productivity is referred to as
A) entrepreneurship. B) human capital. C) labor. D) physical capital.
In the traditional Keynesian model, an increase in government spending
A) causes the C + I + G + X line to shift upward by the full amount of the increase in government spending. B) causes the C + I + G + X line to shift upward by an amount less than the increase in government spending. C) causes the C + I + G + X line to shift upward by more than the increase in government spending. D) causes no change in the C + I + G + X line.
All of the following concepts are related EXCEPT
A. Competition. B. Government planning and regulation. C. The invisible hand. D. The price mechanism.