Complete the following analogy: A criminal is to a police artist's sketch as the economy is to:
A. money.
B. an economic model.
C. a resource.
D. scarcity.
Answer: B
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A liquidity trap is
a. the vertical portion of the LM schedule. b. the horizontal portion of the LM schedule. c. a situation where a given change in the money stock induces a large reduction in the interest rate. d. Both a and c e. Both b and c
Which of the following equations would indicate income elasticity of demand?
a. +20% × +10% = +200 b. +20% + +10% = +30 c. +20% ¸ +10% = +2 d. +20% – +10% = +10
Most financial markets in the United States operate under a system:
A. where it depends on which state where the financial market is located since some states do not have any regulations. B. without any formal rules or regulation. C. with many rules and regulation to ensure a fair market. D. that is totally controlled by the federal government.
One valuable lesson investors should learn from the stock market behavior during the late 1990s and early 2000s is that the Fed:
A. can control the stock market. B. cannot prevent a stock market decline. C. can reduce the idiosyncratic risk of investing but not the systematic risk. D. can eliminate the risk from investing.