A boom in the stock market affects the economy because
A. wealth of consumers grows as stock prices increase.
B. firms invest more as demand grows.
C. consumers consume more as stock prices increase.
D. all of the above.
Answer: D
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Adam Smith noted in 1776 that
A. the wealth of nations comes from the money the nations have accumulated. B. the wealth of nations comes from the gold the nations have accumulated. C. the wealth of nations comes from the resources that produce the nation's goods and services. D. the problem of scarcity had been licked.
If a firm is due to be paid in euros in two months, to hedge against exchange-rate risk the firm should ________ foreign exchange futures ________
A) sell; short B) buy; long C) sell; long D) buy; short
Which of the following terms is used to refer to the ability of people to exercise authority over the resources they own?
a. natural rights b. property rights c. input control d. collective control
Compared to regulations, corrective taxes on pollution ______.
a. provide less incentive to reduce pollution b. provide little benefit to the public c. create a higher level of efficiency d. create higher numbers of negative externalities