Explicit costs are
A. the opportunity costs of all resources used by the firm.
B. all costs associated with the short run.
C. actual expenditures that a firm must make.
D. the costs associated with the resources that the firm owns.
Answer: C
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Money serves as a standard of value, which is another way of saying that money functions as
A) a unit of accounting. B) a medium of exchange. C) an opportunity cost of investment. D) standard of deferred payment.
In the mortgage securitization process, "tranching" means:
a. Separating mortgage cash flows into securities of varying risks and returns. b.Pooling risks by combining mortgages with high and low credit ratings. c. Creating a whirlpool of speculative activity by offering easy credit terms to borrowers who do not have the capacity repay their loans. d. Creating new incentives for families to own homes. e. None of the above.
Which of the following is not correct?
a. The higher average return on stocks than on bonds comes at the price of higher risk. b. Risk-averse persons will take the risks involved in holding stocks if the average return is high enough to compensate for the risk. c. Insurance markets reduce risk, but not by diversification. d. Risk can be reduced by placing a large number of small bets, rather than a small number of large bets.
When a market is efficient:
A. total surplus is zero. B. there is no exchange that can make anyone better off without someone becoming worse off. C. a central planner must be involved. D. an increase in price will reduce the deadweight loss.