If farmers operating in the competitive wheat industry are incurring losses, and are not kept in business with government subsidies, which of the following will result? A) Price and quantity produced will both increase in the long run. B) Resources will be reallocated out of the wheat industry into more productive uses. C) Farmers will […]
Debt deflation occurs when A) an economic downturn causes the price level to fall and a deterioration in firms’ net worth because of the increased burden of indebtedness. B) rising interest rates worsen adverse selection and moral hazard problems. C) lenders reduce their lending due to declining stock prices (equity deflation) that lowers the value […]
Everything else held constant, a weaker dollar will likely hurt A) textile exporters in South Carolina. B) wheat farmers in Montana that sell domestically. C) automobile manufacturers in Michigan that use domestically produced inputs. D) furniture importers in California. ANSWER D
Adding an independent variable to a regression model will always reduce the coefficient of determination. Indicate whether the statement is true or false ANSWER FALSE
If net capital flow were zero for a country, then exports would not equal imports. Indicate whether the statement is true or false ANSWER FALSE
Which of the following are transaction deposits? A) savings accounts B) small-denomination time deposits C) checkable deposits D) certificates of deposit ANSWER C
Everything else constant, a stronger dollar will mean that A) vacationing in England becomes more expensive. B) vacationing in England becomes less expensive. C) French cheese becomes more expensive. D) Japanese cars become more expensive. ANSWER B
The central bank of the United States is the: A) First American Bank. B) Federal Reserve. C) Federal Deposit Insurance Corporation. D) U.S. Treasury. ANSWER B
Assume a firm sells two complementary products. Bundling is more likely to be a successful price discrimination strategy when one group of customers is willing to pay a higher price for one of the items in the bundle and another group is willing to pay a higher price for the other item. Indicate whether the […]
During a “flight to quality” A) the spread between Treasury bonds and Baa bonds increases. B) the spread between Treasury bonds and Baa bonds decreases. C) the spread between Treasury bonds and Baa bonds is not affected. D) the change in the spread between Treasury bonds and Baa bonds cannot be predicted. ANSWER A
