Until recently, shares of stock accounted for 40 percent of Jimmy's savings. A few days ago, Jimmy sold some bonds and bought some additional shares of stock. Now shares of stock account for 70 percent of Jimmy's savings. How did this change affect Jimmy's expected retun on his savings? How did it affect the risks he faces?
The increased percentage of stock-holdings increased Jimmy's expected return and it also increased the risks he faces.
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If investment in an economy falls, which of the following is likely to happen?
A) Labor demand will increase. B) The revenue of firms in the economy will fall. C) Asset prices will rise. D) The number of mortgage defaults will fall.
New Keynesian explanations for sticky prices and wages include
a. menu costs. b. efficiency wages. c. insider-outsider distinctions. d. productivity shocks. e. all but d.
An advantage of a negative income tax is _____
a. it is more paternalistic than in-kind transfer payments b. it could replace many existing transfer programs c. it eliminates the incentive to substitute into leisure d. it has no excess burden
Proponents of rational expectations theory argued that, in the most extreme case, if policymakers are credibly committed to reducing inflation and rational people understand that commitment and quickly lower their inflation expectations, the sacrifice ratio could be as small as
a. 0. b. 1. c. 4. d. 5.