Why are stock market bubbles costly for the economy?
A. They hurt consumers more than corporations.
B. They lead to a misallocation of resources in both the short-term and long-term.
C. They lead to a reduction in real investment in both the short-term and long-term.
D. They imply that the actual stock price is equal to the fundamental value of the stock.
Answer: B
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If the CPI is 120, this means that
A) prices are 120 percent higher than in the reference base period. B) prices are 0.12 times higher than in the reference base period. C) prices are 20 percent higher than in the reference base period. D) the inflation rate must be positive.
In the United States in 2014, about seventy percent of those who were not covered by health insurance
A) live in families in which at least one member has a job. B) live in families in which all members are unemployed. C) are single and unemployed. D) are retired from the workforce.
Assume that in an effort to discourage competitors, firm X has lowered its price below its average total costs of production. This is an illustration of the limit pricing form of strategic entry deterrence
Indicate whether the statement is true or false
Refer to the diagram. The real-business cycle view of recession would best be described by:
A. a decrease of aggregate demand from AD 1 to AD 2 , followed by a decrease in aggregate
supply from AS LR1 to AS LR2 .
B. an increase in aggregate demand from AD 1 to AD 2 , which in turn caused a decrease in
aggregate supply from AS LR1 to AS LR2 .
C. a decrease in aggregate supply from AS LR1 to AS LR2 , followed by a decrease in aggregate demand from AD 1 to AD 2
D. a decrease in aggregate supply from AS LR1 to AS LR2 , followed by an increase in aggregate
demand from AD 2 to AD 1