When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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If a stock's dividend is expected to grow at a constant rate of eight percent in the future
and it has just paid a dividend of $1.25 a share, and you have an alternative investment of equal risk that will earn a 12 percent rate of return, what would you be willing to pay per share for this stock? A) $31.25 B) $1.40 C) $1.25 D) $1.12
The precautionary motive for holding money reflects the behavior of people who hold money
a. instead of near money b. to transact purchases they expect to make c. as insurance against unexpected needs d. to speculate in the stock market e. to take advantage of anticipated or hoped for changes in interest rates
The adjustment of the ____________ is the rationing mechanism in market economies.
A. price B. competition C. government D. None of the choices are correct.
The law of diminishing returns results in:
A. an eventually rising marginal product curve. B. a total product curve that eventually increases at a decreasing rate. C. an eventually falling marginal cost curve. D. a total product curve that rises indefinitely.