Speculators profit by taking risks, while the actions of arbitrageurs involve no risk
a. True
b. False
A
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Consider a small open economy with desired national saving of Sd = 20 + 200rw and desired investment of Id = 30 - 200rw. Calculate national saving, investment, and the current account balance in equilibrium when the real world interest rate is
(a) rw = 0.025. (b) rw = 0.05. (c) rw = 0.0. (d) Now suppose something causes desired national saving to increase by 10, so that it is now Sd = 30 + 200rw. Repeat parts (a), (b), and (c). (e) Suppose, with desired national saving at its original level of Sd = 20 + 200rw, something causes desired investment to rise by 10, to Id = 40 - 200rw. Repeat parts (a), (b), and (c).
The classical economists argued that planned saving and planned investment will always be equal because of changes in
A) the level of real disposable income. B) the interest rate. C) the price level. D) wages.
Which of the following is the best example of a variable cost?
a. property taxes b. lease payments for equipment rental c. rent on office space d. wages for hourly workers e. interest on outstanding loans
Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal to marginal cost?