What form of irrational behavior can cause asset price bubbles?
A) People do not based their investment decision on the fundamental value of the asset but only on the belief that the asset price will continue to increase.
B) People accidentally buy assets that they did not want, and this drives up the asset price.
C) Asset owners panic and begin to sell their assets as quickly as possible.
D) People throw darts at a list of stocks and buy whatever the dart lands on without thinking about the reasons.
A
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
Natural gas is a natural monopoly. The figure above shows the market for natural gas in the city of Lucknow. When a marginal cost pricing rule regulation is imposed, the price per household per month is ________
A) $30 and 20,000 household are served B) $10 and 40,000 household are served C) $10 and 20,000 household are served D) $20 and 30,000 households are served
Albert, Betty, Christine, and David are all very good students. When they hold their study sessions, they often discuss very difficult concepts in great detail. Christine's roommate, Elizabeth, who takes completely different classes, still learns from the discussions of the others. This is the case of a(n) _______________ which _______________ a _______________
a. public good; benefits; third party b. externality; imposes a cost on; free rider c. market failure; results from; third party d. free rider; benefits from; third party e. externality; benefits; third party
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls. b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises. c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same. d. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.