How might the behavior of professional investment managers prior to the financial crisis of 2007-2009 contributed to the depth of the plunge of corporate and mortgage security prices during the crisis?
What will be an ideal response?
With market interest rates low and stable, investment managers may have been trying to generate high interest payments by taking greater risks in a search for yield. When the risk came to fruition during the financial crisis the prices of the riskier securities fell disproportionately.
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Production efficiency occurs
A) anywhere inside or on the production possibilities frontier. B) when the total cost of production is minimized. C) at all points on the production possibilities frontier. D) at only one point on the production possibilities frontier. E) at all points inside the production possibilities frontier.
The least-cost way of producing a particular rate of output is represented by a point of tangency between a short-run average cost curve and the
a. total cost curve b. short-run average total cost curve c. average variable cost curve d. long-run average cost curve e. marginal cost curve