According to efficient market theory, which of the following can best predict the stock price of a particular company tomorrow?
A) a finance professor who knows a lot of investment theory
B) a stock trader who has traded stocks for more than 10 years
C) that company's employee who has inside information about the company
D) none of the above: Everyone has an equal chance of predicting future stock prices
C
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The banking system currently has $100 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed lowers the reserve requirement to 5 percent and at the same time buys $10 billion worth of bonds, then by how much does the money supply change?
a. It rises by $200 billion. b. It rises by $800 billion. c. It rises by $1,200 billion. d. None of the above is correct.
If the cross-elasticity of goods X and Y is positive, then the sales of X move:
A. in the opposite direction as the price of Y, and X and Y are substitute goods. B. in the opposite direction as the price of Y, and X and Y are complementary goods. C. in the same direction as the price of Y, and X and Y are substitute goods. D. in the same direction as the price of Y, and X and Y are complementary goods.