A U.S. Treasury bond dealer with a large portfolio who sells a futures contract for U.S. Treasury bonds is:
A. ensuring the sales price of the bond through hedging.
B. taking on additional risk in hopes of getting a larger return.
C. not likely to find a buyer for this transaction.
D. should see the value of the futures contract increase as bond prices rise.
Answer: A
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In the competitive market for balloon rides, marginal social cost equals marginal social benefit when 3,000 balloon rides a day are taken and the price of a ride is $130. Which of the following statements is TRUE?
A) There is a free-rider problem. B) Too many rides are available. C) Too few rides are available and the price of a balloon ride is too high. D) The efficient quantity of balloon rides is 3,000 a day.
Graphically, the effects of an external cost can be shown as
A) a leftward shift of the market demand curve. B) a leftward shift of the market supply curve. C) a downward movement along the market demand curve. D) a rightward shift of the market supply curve.
Evaluate the following statements: I. The slope of the demand curve is always equal to the elasticity of demand. II. Moving down along a downward-sloping, straight-line demand curve, the elasticity of demand falls
a. (I) and (II) are both true. b. (I) is true and (II) is false. c. (I) is false and (II) is true. d. (I) and (II) are both false.
To expand the money supply the Fed could lower the required reserve ratio, lower the discount rate, or purchase government securities
Indicate whether the statement is true or false