We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that
a. Bond A was issued by a financially weak corporation and Bond B was issued by a financially strong corporation.
b. Bond A was issued by the Exxon Mobil Corporation and Bond B was issued by the state of New York.
c. Bond A has a term of 1 year and Bond B has a term of 5 years.
d. All of the above are correct.
c
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
According to the economy's self-correcting mechanism, how does the economy return to potential output following a negative demand shock? How is the recovery process different, if the government implements a policy of economic stimulus?
What will be an ideal response?
If Happy Cows contractually requires distributors who purchase Happy Cows' milk to also purchase Happy Cows' cream, this is an example of ________.
A) territorial confinement B) a tying arrangement C) exclusive dealing D) a requirements contract
Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate supply shifts left, the central bank must
a. decrease the money supply so interest rates rise. b. decrease the money supply so interest rates fall. c. increase the money supply so interest rates rise. d. increase the money supply so interest rates fall.