The rate of return that financial investors require to hold a risky asset minus the rate of return on a safe asset is called the:
A. nominal interest rate.
B. real interest rate.
C. risk premium.
D. discount rate.
Answer: C
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If banks borrowed from the Fed when the federal funds rate was below its target level
A) the supply of reserves would decrease and the federal funds rate could fall even further. B) the supply of reserves would increase and the federal funds rate would rise. C) the supply of reserves would decrease and the federal funds rate would rise. D) the supply of reserves would increase and the federal funds rate could fall even further.
If insurance is fairly priced, a risk-averse individual will purchase enough insurance to cover the full amount of the possible loss
Indicate whether the statement is true or false
If a hotel room priced at 120,000 Venezuela bolivar per night can be purchased for 80 U.S. dollars, the exchange rate is:
a. 9,600 bolivar per dollar. b. 1,500 dollars per lira. c. 1,500 bolivar per dollar. d. .00066 bolivar per dollar.
GDP is a measure of the total output of an economy
a. True b. False Indicate whether the statement is true or false