In a well-functioning financial market, the only way to get consistently higher returns over the long run is to take more risks. This is known as the
A. risk-return principle.
B. fixed income principle.
C. price appreciation principle.
D. diversification principle.
Answer: A
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In the equation GDP = C + I + G + F, in which F equals net export spending (i.e., total spending on exports minus total spending on imports), imports are subtracted from the other types of expenditures because:
A) imports reduce national welfare. B) other countries do not import goods from the U.S. C) it represents a flow of expenditures out of the domestic economy to the rest of the world. D) the value of imports is difficult to determine due to the fact that they are frequently stated in terms of foreign currency.
If a good is a normal good, an increase in income will
A) decrease the quantity demanded of the good. B) increase the demand for the good. C) cause the demand curve for the good to shift to the left. D) cause a movement down along the demand curve.
Vertical integration often aims to
a. Prevent the retailers from defeating upstream price discrimination through arbitrage b. Reward the retailer for undertaking the risk inherent in introducing a new product c. Avoid paying higher taxes d. All of the above
Under a progressive tax system: a. only the rich are taxed
b. higher marginal taxes are imposed on higher incomes. c. lower taxes are imposed on everyone. d. everyone pays the same percent of their income for tax.