We would not expect a Japanese financial asset and a U.S. financial asset with identical risk, liquidity, and information characteristics to have different expected returns because
A) the U.S. and Japanese governments have pledged themselves to avoid this outcome.
B) traders would buy the asset with the higher expected yield and sell the asset with the lower expected yield until the yields were brought into equality.
C) traders would sell the asset with the higher expected yield and buy the asset with the lower expected yield until the yields were brought into equality.
D) the exchange rate between the dollar and the yen would adjust automatically to eliminate any difference in yields.
B
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Which of the following is true of protectionism?
A) It lowers prices for domestic consumers and increases social surplus. B) It increases prices for domestic consumers and also increases social surplus. C) It increases prices for domestic consumers and lowers social surplus. D) It lowers prices for domestic consumers and also reduces social surplus.
Which of the following is true of a first-price sealed-bid auction?
A) Bidders directly compete with each other. B) Bidders place their bids simultaneously. C) Bidders know each other's bids. D) Bidders always bid below their willingness to pay.
Dole Co operates in a monopolistically competitive market. Which of the following characterizes Dole Co's market?
A) Dole Co. supplies a small portion of the market's output. B) Dole Co.'s product is slightly different from its competitors. C) Dole Co. faced no barrier to entry when it decided to enter its market. D) All of the above describe Dole Co.'s market.
The presence of correlated error terms creates problems for inference based on OLS. These can be overcome by
A) using HAC standard errors. B) using heteroskedasticity-robust standard errors. C) reordering the observations until the correlation disappears. D) using homoskedasticity-only standard errors.