A publicly traded firm has 4 million shares of stock outstanding, with a current share price of $50. The value of its plant and equipment is $250 million. Its profit annually is $50 million. This firm should
a) divest itself of some of its capital
b) issue more stock
c) continue to operate as it is
d) invest in new plant and equipment
e) issue bonds
a) divest itself of some of its capital
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Explain the potential downfalls of the Fed implementing an expansionary monetary policy or contractionary monetary policy at the wrong time
What will be an ideal response?
In the simple Keynesian framework, the price level
A) is fixed. B) varies directly with unemployment. C) varies inversely with wages. D) is indeterminate.
Which of the following would cause aggregate demand to decrease?
A. Businesses and households believe that the economy is headed for good times, so they begin to feel increased security about their jobs. B. A drop in the foreign exchange value of the dollar C. The Fed increases the amount of money in circulation. D. The government increases taxes on both business and personal income.
Which of the following is NOT associated with the new Keynesian economics?
A. policy irrelevance proposition B. inflation dynamics C. sticky-price theories of real GDP determination D. small-menu cost theory