A bond with default risk will always have a ________ risk premium and an increase in its default risk will ________ the risk premium
A) positive; raise
B) positive; lower
C) negative; raise
D) negative; lower
A
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In the long run, the unemployment rate
A) is equal to the expected unemployment rate. B) is zero. C) can take on any value. D) is equal to the natural unemployment rate. E) must be equal to the expected inflation rate.
In the table above, if a unit of capital is $50 per day and an hour of labor is $15 per day, which method is economically efficient?
A) A B) B C) C D) D
When we calculate the marginal physical product of labor, we assume
a. all resources increase proportionately with the quantity of labor b. all other resources are held constant (are unchanging) c. output is fixed (unchanging) d. the wage rate is fixed (unchanging) e. the prices of all resources used in production are fixed (unchanging)
The economy's self-correcting mechanism to eliminate a recessionary gap relies on
a. falling interest rates that shift the aggregate demand curve outward. b. falling wage rates that shift the aggregate supply curve outward. c. rising wage rates that shift the aggregate supply curve inward. d. increases in the price level that shift the aggregate supply curve inward.