Does a stock certificate or a bond represent ownership of a company and a claim on its profits?
What will be an ideal response?
A stock certificate represents ownership of a company. A bond is a debt of the issuing company, not an ownership claim on the company.
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Which of the following statements is true of economic growth and GDP across the world before 1800?
A) There was sustained growth because whatever improvements in GDP were realized were invested in capital equipment. B) The income per capita in all countries throughout the world was less than $500 per capita. C) The income per capita in all countries throughout the world was more than $1,000 per capita. D) There was a lack of sustained growth because the pace of technological change was slow.
If we look at real and nominal interest rates in the United States since 1971, we see that
A) the real interest rate has almost always been less than the nominal interest rate because of inflation. B) at times the nominal interest rate has been greater than the real interest rate and at times has been less than it. C) the difference between the nominal and real interest rates has widened during the 1990s because of inflation. D) the nominal interest rate has always been less than the real interest rate because of inflation. E) both the nominal and real interest rates were negative in the highly inflationary 1970s.
The idea that government budget deficits do not matter under certain circumstances is
A) called the Friedman-Lucas theory. B) called the Ricardian equivalence theorem. C) attributed to Edward Prescott and Finn Kydland. D) preposterous.
In Eugene, Oregon, next year there is a 2% chance of an earthquake severe enough to destroy all buildings and personal property
Quincy, who has $3,000,000 in buildings and personal property, has the opportunity to purchase complete earthquake insurance. Which is true? A) Quincy should not purchase earthquake insurance unless he can get it for less than $60,000, because that's all he could possibly lose in an earthquake. B) Quincy should not purchase earthquake insurance unless he can get it for less than $60,000, because that's his expected loss in an earthquake. C) If Quincy buys earthquake insurance, and an earthquake does not occur, he will have received no utility from the transaction. D) What Quincy is willing to pay for the earthquake insurance depends upon his degree of risk aversion. E) Quincy should be willing and able to pay up to $3,000,000 for earthquake insurance.