The theory of efficient markets suggests that the steep decline the value of stocks traded on the NASDAQ was due to
a. a speculative bubble.
b. a response to new information about firms' expected future profitability..
c. a natural cycle in technology stock prices evidenced by charts of previous prices trends.
d. moral hazard.
b. a response to new information about firms' expected future profitability..
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Answer the following statements true (T) or false (F)
1. The biggest disadvantage of a sole proprietorship is the lack of distinction between the business and the owner. 2. In a partnership, each partner’s liability is limited to his or her contribution to the partnership. 3. The board of directors has unlimited financial liability for the debts of the corporation. 4. A corporation can raise money by selling stock or bonds.
According to Porter's Five Competitive Forces Model, which kinds of products are most likely to limit the ability of firms in an industry to raise prices?
A) complementary products produced by different firms in the same industry B) similar products produced by similar industries in low-cost countries C) differentiated products that target a small subsegment of the industry D) substitutable products produced by firms in different industries
In the New Keynesian open economy model, if the exchange rate is fixed
A) fiscal policy and monetary policy are powerless. B) fiscal policy is an effective stabilization tool. C) a change in current total factor productivity increases output. D) monetary policy is an effective stabilization tool.
In 2007, investment in France increased by 7 billion euros. Assume the price level was constant, the multiplier was 5 and the economy was at full employment. As a result, equilibrium expenditure:
a) Increased by 35 billion euros b) Increased by 1.4 billion euros c) decreased by 35 billion euros d) decreased by .71 billion euros