What evidence is there that the transaction costs involved with the buying and selling of stocks is low?
What will be an ideal response?
Probably the best evidence is the volume of trading that occurs on an average day. As an example, on an average day billions of shares of stock may trade in the U.S. alone, and while most of these trades are undertaken using brokers, the fee the broker requires is usually a very small percentage of the overall value of the instruments traded. The volume of trades and the low fees for these trades would not result if transaction costs were high.
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The time it takes for an additional dollar of net government expenditures to work its way through the economy and have its full effect
A) is about one quarter of a year. B) is between one and two years. C) is not yet known precisely because little empirical research has been done on the question. D) probably cannot be predicted from an examination of historical data.
Holders of __________ bonds can exchange their bonds into shares of the company's common stock at a predetermined price
A) callable B) convertible C) investment grade D) junk
Which of the following is true of marginal revenue product (MRP) and marginal product (MP)?
a. MRP = MP ? price, whether the firm is a price searcher or not. b. MRP = MP ? price only if the firm is a price searcher. c. MRP = MP ? price only if the firm sells in a perfectly competitive market. d. MRP = MP ? marginal cost only if the firm is a price searcher. e. MRP = MP/price only if the firm is a price taker.
Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is
a. included in GDP whether Susan pays Speedy Lube to change it or changes it herself. b. included in GDP if Susan pays Speedy Lube to change it but not if she changes it herself. c. included in GDP if Susan changes it herself, but not if she pays Speedy Lube to change it. d. not included in GDP whether Susan pays Speedy lube to change it or she changes it herself.