An option that can only be exercised at maturity is called
A) a swap.
B) a stock option.
C) an European option.
D) an American option.
C
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Use the following graph to answer the next question.
If aggregate demand curve shifts from AD2 to AD1, the effect on real GDP will be a decrease from ________.
A. Q3 to Q4 B. Q2 to Q4 C. Q3 to Q1 D. Q2 to Q1
Suppose the cross-price elasticity of demand between grapefruit juice and orange juice is approximately 6. What does this mean?
A) A 1 percent decrease in the price of grapefruit juice leads to a 6 percent increase in orange juice consumption. B) A 6 percent increase in the price of grapefruit juice leads to a 1 percent increase in orange juice consumption. C) The demand for orange juice is 6 times greater than the demand for grapefruit juice. D) If the price of grapefruit juice rises by $1, 6 more cartons of orange juice will be purchased.
An increase in the real interest rate will
a. lead to an increase in the expected inflation rate. b. increase the real cost of purchasing goods and services in the current period relative to future periods. c. encourage borrowers to demand a larger quantity of funds. d. reduce the quantity of funds supplied to the loanable funds market.
Banks and mutual funds are examples of financial markets
a. True b. False Indicate whether the statement is true or false