Profits from speculation arise because of
A) the spread between the bid and ask prices on bonds.
B) the illiquidity of markets for derivative instruments.
C) the high information costs in markets for derivative instruments.
D) disagreements among traders about future prices of a commodity or financial instrument.
D
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A major purchaser of corporate bonds is
A) state and local governments. B) money market mutual funds. C) pension and retirement funds. D) the Federal Reserve.
An example of a standardized good is:
A. cereal. B. iron. C. soda. D. pizza.
The Fed
a. issues currency but has little control over U.S. monetary policy b. serves as the central bank for the United States c. levies a variety of taxes—from sales tax to direct income tax—to control the money supply d. ensures commercial bank profitability to stabilize the money economy e. bails out savings and loans on a regular basis
A Pareto preferred transaction is one where
A. the loser in a transaction loses less than the gainer gains. B. the consumers must have moved to the contract curve. C. all must gain welfare compared with the pre-transaction position. D. no one loses and at least one person gains in the transaction.