Which of the following is a TRUE statement about the relationship between the price of bonds and the interest rate?
A) The prices of bonds are directly related to the interest rate.
B) The prices of bonds increase when the interest rates rise.
C) The prices of bonds are unrelated to the interest rate.
D) The prices of bonds are inversely related to the interest rate.
D
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Financial markets
A) channel funds indirectly between borrowers and lenders. B) channel funds directly from lenders to borrowers. C) act as go-betweens by holding a portfolio of assets and issuing claims based on that portfolio to savers. D) generally provide lenders with lower returns than do financial intermediaries.
Suppose that the Council of Economic Advisers tells the President that "the unemployment rate is 4 percent." The President responds, "That rate is still too high." The President's statement is
a. a normative statement b. a positive statement c. empirically verifiable by checking economic data d. an indisputable statistical fact e. an incorrect positive statement
Insolvency is a condition where a firm's
A) liabilities are greater than assets. B) assets are greater than liabilities. C) assets are equal to liabilities. D) liabilities are less than or equal to assets.
Applied to perfectly competitive labor markets, the marginal principle tells firms to hire workers until:
A. the marginal revenue product of the last worker hired equals the wage. B. marginal productivity begins to diminish. C. average total costs are minimized. D. the price of the product equals the wage of the worker.