If two investments are uncorrelated:
A. there is no benefit from diversification.
B. there is no benefit to hedging.
C. diversification reduces risk without changing the expected payoff.
D. diversification reduces both risk and the expected payoff.
C. diversification reduces risk without changing the expected payoff.
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Explain what is included in M1 and M2. Is all of M1 money? Is all of M2 money?
What will be an ideal response?
A price floor
A) changes the equilibrium price if it is imposed in black markets. B) changes the price and quantity if it is set below the equilibrium price. C) changes the price and quantity if it is set above the equilibrium price. D) does not create a black market if it is set above the equilibrium price. E) changes the price and quantity only if it equals the equilibrium price.
The time-inconsistency problem in monetary policy can occur when the central bank conducts policy
A) using a nominal anchor. B) using a strict and inflexible rule. C) on a discretionary, day-by-day basis. D) using a flexible, discretionary rule.
A firm's marginal cost has a minimum value of $80, its average variable cost has a minimum value of $90, and its average total cost has a minimum value of $100 . Then the firm will shut down in the short run once the price of its product falls below
a. $100. b. $90. c. $80. d. $40.