If the supply of bonds in the United States decreases, bond prices will rise. When bond prices rise interest rates will
A) fall, which will make U.S. financial assets more attractive to foreigners.
B) rise, which will make U.S. financial assets more attractive to foreigners.
C) fall, which will make U.S. financial assets less attractive to foreigners.
D) rise, which will make U.S. financial assets less attractive to foreigners.
Ans: C) fall, which will make U.S. financial assets less attractive to foreigners.
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Like the monopolist, the monopolistically competitive firm:
A. faces a downward sloping demand curve. B. is a price taker. C. sets the price where marginal cost equals marginal revenue; the demand curve doesn't matter. D. All of these statements are true.
Many investment banks quickly collapsed when the housing market collapsed because
a. the Federal Reserve was unwilling to provide them with short-term loans. b. they ignored the risk assigned by the rating agencies, resulting in leverage ratios that were too low. c. new regulations required investment banks to maintain more capital against their residential housing loans than was true for commercial business loans. d. they were highly leveraged and had little reserves on hand to meet the short-term debt obligations of the mortgage-backed securities.
The StolperSamuelson theorem suggests that, over time, free international trade should lead to:
a. equalization of real wages across the world. b. greater divergences in real wages across the world. c. equalization of prices across the world. d. greater divergences in prices across the world.
When demand is unit elastic, a change in price will result in total revenue falling to zero.
Answer the following statement true (T) or false (F)