The major difference between stocks and bonds is
A. a stock is ownership in the corporation and a bond is a debt instrument of the corporation.
B. a stock is a debt instrument of the corporation and a bond is ownership in the corporation.
C. a stock has value in the marketplace and a bond does not.
D. a bond has value in the marketplace and a stock does not.
Answer: A
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When a commercial bank borrows directly from the Fed, it pays
A) a zero rate of interest. B) an interest rate called the federal funds rate. C) an interest rate called the discount rate. D) the Fed in a mutually agreed upon quantity of gold reserves in its vaults.
If desired spending is less than output, then firms:
A) accumulate their inventories and cut production. B) deplete their inventories and cut production. C) deplete their inventories and increase production. D) accumulate their inventories and increase production.
Under the gold standard, a nation’s domestic economic policy
a. was subordinate to balance-of-payments adjustments. b. controlled balance-of-payments adjustments. c. was unrelated to balance-of-payments adjustments. d. was controlled by the World Bank.
Measured as a share of national income, government expenditures on income transfers during the last 70 years have
a. grown rapidly. b. declined substantially. c. been virtually unchanged. d. increased throughout much of that period, but they have declined substantially since 1980.