The uncertainty about the return an asset will earn is
A) liquidity.
B) risk.
C) time to maturity.
D) stochastic dominance.
B
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If the difference between the marginal benefit and the marginal cost of a good is as large as possible,
A) resources are being used with maximum efficiency. B) resources would create more value producing other goods and hence the production of this good should be decreased. C) more of the good should be produced. D) allocative efficiency has been attained. E) Both answers A and D are correct.
When the Federal Reserve purchases a government bond from a primary dealer, reserves in the banking system ________ and the monetary base ________, everything else held constant
A) increase; increases B) increase; decreases C) decrease; increases D) decrease; decreases
Which of the following is true of a small open economy, but not of a large open economy?
A) Net exports are unlikely to be close to zero. B) The domestic real interest rate is equal to the world real interest rate. C) Changes in desired investment result in changes in the trade balance. D) Changes in desired investment result in changes in actual investment. E) none of the above
The best-selling mystery To the Nines by Janet Evanovich was sold in hardcover for $25.95 when it was released. One year later, the publisher issued a softcover edition for $7.99. If the marginal cost of printing a softcover book is not much less than the marginal cost of printing a hardcover, the pricing difference:
A. is probably due to price discrimination in which the seller charges a higher price to consumers with less elastic demand. B. must be due to a difference in fixed costs. C. is probably due to price discrimination in which the seller charges a higher price to consumers with a more elastic demand. D. cannot be explained by economic theory.