Financial intermediaries reduce risk by
A) investing in a large number of projects with independent returns.
B) gaining expertise in evaluating and monitoring investments.
C) investing in a small number of projects with independent returns.
D) limiting the diversity of their investment portfolios.
A
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An individual holds $10,000 in a checking account and the price level rises significantly. Hence
A) the individual's real wealth and consumption expenditure decrease. B) the individual's real wealth decreases but real national wealth increases. C) there is no change in the individual's real wealth. D) the individual's real wealth increases.
Assume an economy is producing only one product. Year 2 is the base year. Output and price data for a five-year period are given.YearUnits of OutputPrice Per Unit14$425537849951010Refer to the above data. If year 2 is chosen as the base year, the real GDP for year 1 is:
A. $20. B. $25. C. $4. D. $16.
Suppose there are two firms maintaining a cartel agreement. If one firm suddenly drops its price, the other firm could interpret this as signaling:
A. a change in market conditions. B. limit pricing. C. cartel pricing. D. cooperative pricing.
The ratio at which nations will exchange one product for another is known as the:
A. Exchange rate B. Discount rate C. Terms of trade D. Balance of trade