How does a mutual fund lower transactions costs through economies of scale?
What will be an ideal response?
The mutual fund takes the funds of the individuals who have purchased shares and uses them to purchase bonds or stocks. Because the mutual fund will be purchasing large blocks of stocks or bonds they will be able to obtain them at lower transactions costs than the individual purchases of smaller amounts could.
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If the expenditures multiplier in an economy is 3 and the government wants to increase aggregate demand by $12 billion at all price levels, it should cut taxes by
A. $9 billion. B. $12 billion. C. $6 billion. D. $3 billion.
You borrow money to buy a house in 2009 at a fixed interest rate of 5.5 percent. By 2012, the inflation rate has steadily fallen to 1.5 percent from the recent high of 3.0 percent in 2009
Considering only your mortgage, is inflation good news or bad news for you? A) bad news, because it makes the nominal value of your mortgage payments increase B) bad news, because it makes the real value of your mortgage payments increase C) good news, because it makes the real value of your mortgage payments decrease D) bad news, because inflation hurts everyone
In the figure above, a single-price unregulated monopoly sets a price equal to
A) a. B) b. C) c. D) d.
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. If the exchange rate between apples and oranges in international markets is 1 ton of apples per 3 tons of oranges: a. Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges to other
countries. b. Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples to other countries. c. Karl and Adam will trade apples and oranges with one another. d. Karl and Adam will not specialize or engage in international trade.