When stock prices reflect fundamental values:
A. all investors will have positive returns.
B. all companies will have an easier task of obtaining financing for investment projects.
C. the allocation of resources will be more efficient.
D. the overall level of the stock market should move higher.
Answer: C
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A recession can best be defined as a period of time in which
A. total output of the economy falls. B. total output of the economy rises very slowly. C. total unemployment falls. D. total international trade fails to rise. E. the rate of inflation falls below zero.
Use the figure below to answer the following question.
If actual production and consumption occur at Q2
A. there is deadweight loss of d. B. there is deadweight loss of f. C. consumer surplus and producer surplus is maximized. D. economic surplus is below the maximum.
If an economist claims there are substitutes for clean air, he is really saying
A) clean air is free air. B) there are costs to cleaning the air. C) nobody is truly harmed by unclean, polluted air. D) dirty air is better than clean air. E) economists don't care for clean air.
Refer to Table 2-12. If the two countries specialize and trade, who should export sailboats?
A) There is no basis for trade between the two countries. B) Guatemala C) They should both be importing sailboats. D) Honduras