Why might a small investor be interested in buying a mutual fund as opposed to stock in an individual company?
What will be an ideal response?
By buying shares in a mutual fund, small investors reduce the costs they would pay to buy many individual stocks and bonds. Small savers who have only enough money to buy a few individual stocks and bonds can use mutual funds to diversify, which lowers their investment risk because most mutual funds hold a large number of stocks and bonds. If a firm issuing a stock or bond declares bankruptcy, causing the stock or bond to lose all of its value, the effect on a mutual fund's portfolio is likely to be small. The effect might be devastating, though, to a small investor who invested most of his or her savings in the stock or bond. Because mutual funds are willing to buy back their shares at any time, they also provide savers with easy access to their money.
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GDP includes the goods and services produced
A) within a country's borders by citizens and by non-citizens minus the production abroad by the country's citizens. B) within a country's borders by citizens and by non-citizens. C) by a country's legal citizens regardless of where in the world they are located. D) by a country's citizens but not by non-citizens within the country's borders. E) within a country's borders by citizens and non-citizens plus goods produced abroad by the country's citizens.
Jill is the best eye surgeon in town, and she earns $350,000 a year. Susan is an average eye surgeon in town, and she earns $100,000 a year. Jill's skills as a surgeon
a. are valued more by the market relative to Susan's and that explains why her income is higher than Susan's. b. are valued less by the market relative to Susan's and that explains why her income is higher than Susan's. c. are valued less by the market relative to Susan's and that explains why her income is lower than Susan's. d. are more expensive because she receives a compensating differential.
Suppose it takes Paul 3 hours to bake a cake and 2 hours to mow the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn. Which of the following statements is correct?
A. Paul has the absolute advantage in mowing the lawn. B. Paul has the absolute advantage in baking cakes. C. Paul has the comparative advantage in mowing the lawn. D. Paul has the comparative advantage in baking cakes.
When income increases, the money demand curve shifts to the ________, which ________ the interest rate with a fixed money supply.
A) right; increases B) right; decreases C) left; increases D) left; decreases