Gracyn wants to invest in a specific company. She would like little risk and a guaranteed return. She is not hoping to earn a big profit off her investment, just a reliable return. Which investment would be best for her needs?
a. stocks
b. bonds
c. retained earnings
d. mortgage-backed securities
b. bonds
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An example of moral hazard is
a. people drive as carefully in icy conditions with antilock brakes as without b. people drive less safely with more airbags as without c. football players avoid 'spearing' with their heads even with safer helmets d. people read the medicine warnings as carefully when self-medicating versus with a doctor's prescription
The production function is Q = K.4 L.6. The marginal rate of technical substitution is:
A. K-1 L-1. B. 3/2 K L-1. C. 3/2 K-1 L. D. K.6 L-.4.
According to Hernando De Soto, a Peruvian economist, it takes 168 steps in order to have a house registered in the Philippines. In Haiti, it takes 111 visits to officials to formalize a business. However, "if you make the right payments, this tedious process may disappear." The textbook calls this situation an example of:
A. corruption. B. overpopulation. C. political instability. D. inappropriate education.
If a dollar will currently purchase 120 Japanese yen but it is expected that one year from now a dollar will purchase 130 yen:
A. the demand for dollars now will decrease. B. the dollar is expected to depreciate. C. the demand for dollars now will increase. D. the yen is expected to appreciate.