Paying money in order to guarantee a certain level of compensation should an adverse event occur is
A. risk aversion.
B. risk smoothing.
C. risk pooling.
D. risk rating.
B. risk smoothing.
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The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 6 percent. The effect of this interest rate in the money market is that
A) the money market is in equilibrium. B) people buy bonds and the interest rate falls. C) people sell bonds and the interest rate falls. D) bond prices fall and so the interest rate falls.
Refer to Figure 4-3. If the market price is $2.50, what is the consumer surplus on the second ice cream cone?
A) $0.50 B) $1.50 C) $3.00 D) $10.50
The interest rate on a consol equals the
A) price times the coupon payment. B) price divided by the coupon payment. C) coupon payment plus the price. D) coupon payment divided by the price.
In the classical model, an increase in government spending shifts the
a. demand for loanable funds to the right. b. demand for loanable funds to the left. c. supply of loanable funds to the right. d. supply of loanable funds to the left.