If the Fed's policy reaction function equals r = .02 + ?, where r is the real interest rate and ? is the inflation rate. When the inflation rate is at the current target of 2 percent, then the real interest rate will be set at:
A. zero.
B. 6 percent.
C. 2 percent.
D. 4 percent.
Answer: D
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The cross-price elasticity of demand measures how sensitive purchases of a specific product are to changes in
A. the price of that same product. B. the price of some other product. C. the general price level. D. income.
Life expectancy in the U.S.:
a. is the highest in the world b. is the lowest in the world c. ranks about 100th in the world d. ranks about 40th in the world
According to the representative heuristic, people will tend to think that Karen is a vegetarian if:
A. they have just read a book about vegetarians. B. Karen has many of the characteristics of a stereotypical vegetarian. C. if the fraction of vegetarians in the population is increasing. D. they themselves are vegetarians.
If ABC Inc and XYZ Inc have returns that are perfectly positively correlated:
A. adding ABC Inc to a portfolio that includes only XYZ Inc will increase risk. B. adding XYZ Inc. to a portfolio that consists of only ABC Inc. will neither increase nor decrease the risk of the portfolio. C. adding XYZ Inc to a portfolio that consists of only ABC Inc will neither increase nor decrease idiosyncratic risk but will lower systematic risk. D. adding XYZ Inc to a portfolio that consists of only ABC Inc will reduce risk.