The Standard amp; Poor's 500 Index differs from the DJIA in at least two major respects. What are the two major differences?
What will be an ideal response?
The S&P 500 Index differs from the DJIA in (1) that the S&P 500 is constructed from the 500 largest firms in the U.S. economy, where the DJIA uses 30 of the largest firms. Also, (2) the S&P is a value-weighted index, meaning it reflects the total value of owning the entirety of the 500 firms. By contrast, in the DJIA the higher priced stocks carry more weight because it is a price-weighted average. The S&P 500 gives more weight to the larger firms than the DJIA does.
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The practice of the ECB and national central banks of preventing massive bank failures after the financial crisis of 2008 had what effect on the affected economies?
A) Prevention of bank failures greatly reduced the pain of the crisis for taxpayers. B) Prevention of bank failures ended up not saving most banks anyway. C) Banks resisted the takeover by the ECB and refused to make additional credit available. D) Governments financed the bailouts by issuing more domestic debt, which caused extreme fiscal problems.
The term "derived demand" refers to
A) a firm's estimated demand curve derived from sales data. B) the demand for a factor of production that is derived from the demand for the good the factor produces. C) the demand for financial products called derivatives. D) a demand curve that derives from the availability of resources.