Stock prices are
A) based more on the current profitability of firms than on their expected future profitability.
B) based less on the current profitability of firms than on their expected future profitability.
C) based equally on the current profitability of firms and on their expected future profitability.
D) not based on the current profitability of firms or on their expected future profitability.
Answer: B
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Based on historical data, which of the following tended to be most variable over time?
A) real investment spending B) the average propensity to consume C) real consumption spending D) real saving
Japan experienced periods of deflation—a declining price level—during the 1990s. During a deflationary period, which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period
What will be an ideal response?
An important feature of money market mutual fund shares is
A) deposit insurance. B) the ability to write checks against shareholdings. C) the ability to borrow against shareholdings. D) claims on shares of corporate stock.
Which of the following is an advantage of automatic stabilizers?
A) The lag for automatic stabilizers is relatively long. B) It is much easier to measure the impact of automatic stabilizers compared to the impact of discretionary fiscal policy. C) There is no administrative cost to implementing automatic stabilizers. D) Because they affect disposable personal income directly, automatic stabilizers act swiftly to reduce the degree of changes in real GDP.