The practice of spreading one's wealth over a variety of different financial investments in order to reduce overall risk is called:
A. diversification.
B. following the risk premium.
C. allocation.
D. risk reservation.
Answer: A
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As the housing bubble collapsed, and the value of homes decreased, consumers’ loss of wealth led to:
A. decreased consumption, which increased prices, which increased the costs of production, leading to more job loss. B. decreased consumption, which further depressed prices, which reduced output further, leading to more job loss. C. increased consumption, which increased prices, which increased the costs of production, leading to more job loss. D. decreased consumption, which further depressed prices, which decreased the amount people had to spend, and increased savings.
What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?
a. Price would fall, and the effect on quantity would be ambiguous. b. Price would rise, and the effect on quantity would be ambiguous. c. Quantity would fall, and the effect on price would be ambiguous. d. Quantity would rise, and the effect on price would be ambiguous.
Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________, 
A. Rising; B; C B. Falling; A; C C. Falling; A; B D. Rising; A; C
For which of the following is the law of one price least likely to hold?
A) Haircuts B) Gold C) US Treasury Bonds D) Petroleum