Credit risk refers to the probability that the issuer of a bond will fail to pay some or all of the interest or principal
a. True
b. False
Indicate whether the statement is true or false
True
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A financial institution that wants a 5 percent real return on its loans and contemplates a 4 percent annual inflation rate should loan at a nominal interest rate of approximately
A) minus 1 percent. B) 1 percent. C) 9 percent. D) 15 percent. E) 20 percent.
If long run average costs fall with output, you have
a. Increasing returns to scale b. Decreasing returns to scale c. Constant returns to scale d. None of the above
Workers waiting for jobs to open up is most closely associated with
a. cyclical unemployment. b. frictional unemployment. c. seasonal unemployment. d. structural unemployment.
One implication of the phenomenon described by economist Richard Easterlin as the "hedonic treadmill" is that:
A. People who consume more goods and services are happier than those who consume less B. People can only become happier if they are consuming more and more C. There is a threshold of consumption that one must cross before one can be happy D. We can combine the happiness of different individuals to get "total happiness"