In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplied will decrease until equilibrium is reached
Indicate whether the statement is true or false
TRUE
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The Q-theory of investment
A) suggests that a downturn in real GDP will lead to a sharp fall in investment, which leads to further reductions in GDP through the multiplier. B) emphasizes the role of real interest rates and taxes. C) emphasizes that current investment spending depends positively on the expected future growth of GDP. D) links investment spending to stock prices.
Assume the current interest rate on a one-year bond is 7%, and the interest rate investors expect on the one-year bond one year from now is 3%
According to the expectations hypothesis, the current interest rate (per year) on a two-year bond should be A) 3%. B) 5%. C) 7%. D) 10%.
In the early 2000s, laws requiring banks and mortgage brokers to disclose the terms of home loans:
A. prevented Americans from entering into mortgage contracts that they did not understand. B. were an example of how the government can act to solve the moral hazard problem. C. were so numerous and detailed that borrowers didn't read or understand the information the companies had disclosed. D. reduced statistical discrimination in the home mortgage market.
Which of the following kinds of agreements between two or more countries would be an example of a deep integration measure?
A) An agreement to reduce tariffs and quotas B) An agreement to unify customs forms in order to speed up cross-border traffic C) An agreement to impose the same limits on cartels and monopolies D) An agreement to reduce exports