Three factors that cause interest rates among different financial instruments to vary are
A. default risk, expected inflation, and maturity.
B. default risk, maturity, and taxability.
C. default risk, expected inflation, and taxability.
D. default risk, current inflation, and taxability.
Answer: B
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If people have the same abilities, then
a. they cannot gain from trade. b. they can still gain from trade if they have different tastes. c. they can still gain from trade as long as they specialize in different activities. d. they can still gain from trade only if they are facing different absolute prices.
The terms of trade refer to:
A) rules and regulations that govern trade between nations. B) product of the opportunity cost of producing the same good in two trading nations. C) exchange rate of goods for goods. D) amount of money that has to be given up to import an additional quantity of a good.
You're deciding whether to install an $800 moonroof and a $400 security system in your car. Suppose the marginal benefit from the moonroof is $700 and the marginal benefit from the security system is $600. The economic decision rule dictates that you should:
A. purchase both options because the combined cost of both is less than the combined benefit. B. not purchase either because the benefits of each do not exceed the costs. C. purchase only the security system because its marginal benefit exceeds its marginal cost. D. purchase only the moonroof because that will provide you with the greatest marginal benefit.
The idea that governments can plan growth by setting industrial policies to encourage growth of certain industries:
A. is controversial. B. is a proven method for economic growth. C. has worked for the majority of countries that have tried it. D. None of these is true.