Arbitrage equalizes rates of return across similar investments because:
A. arbitrage also equalizes the prices of the assets.
B. investors prefer diversity.
C. investors will want to replace lower rate of return assets with those generating higher rates
of return.
D. investors will want to replace higher rate of return assets with those generating lower rates
of return.
C. investors will want to replace lower rate of return assets with those generating higher rates
of return.
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Which of the following events led to the debate over the applicability of the classical model?
a. World War II b. World War I c. Korean War d. The Great Depression e. The Great Society
Which of the following concepts cannot be illustrated by the production possibilities frontier?
a. efficiency b. opportunity cost c. equality d. trade-offs
The quantity of money demanded __________. Consumers and firms spend ___________.
Fill in the blank(s) with the appropriate word(s).
Suppose American winemakers convince the federal government to issue a directive to serve only domestically produced wine at government functions. This would be an example of:
A. moral hazard. B. the principal-agent problem. C. logrolling. D. rent-seeking behavior.