Arbitrage occurs when investors try to profit from situations where:
A. stock rates of return exceed bond rates of return.
B. bond rates of return exceed stock rates of return.
C. two identical assets have different rates of return.
D. returns on financial assets exceed returns on real assets.
C. two identical assets have different rates of return.
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If an increase in government spending of $20 million results in a $100 million increase in GDP, then the spending multiplier is
A) 0.2. B) 2.5. C) 5. D) 20.
The simultaneous export and import of widgets by the United States is an example of
A) intra-industry trade. B) increasing returns to scale. C) imperfect competition. D) inter-industry trade. E) the effect of a monopoly on international trade.
In calculating multifactor productivity growth, the elasticity of output to changes in capital (given as "b" in the textbook) is assumed to be
A) one minus the population growth rate. B) the depreciation rate. C) the share of capital income in GDP.
Historically, Keynesian economists have argued that government spending will stimulate aggregate demand more than tax cuts because
a. government spending will stimulate aggregate demand more quickly than a tax cut. b. there are fewer adverse side effects to an increase in government spending. c. all of the spending will add to aggregate demand, but a portion of the tax cut will be saved. d. an increase in government spending can quickly be reversed once the economy has recovered.