In general, the riskier the investment, the _____________________ the potential profit rate.
Fill in the blank(s) with the appropriate word(s).
higher
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Refer to Figure 10.7. A movement from point C to point B could be caused by
A) an increase in consumer confidence accompanied by a decrease in the target interest rate. B) a decrease in consumer confidence accompanied by an increase in the expected rate of inflation. C) a negative demand shock accompanied by an increase in the term structure effect. D) a positive demand shock accompanied by a decrease in the default-risk premium.
The optimal level of air quality
a. is always zero b. occurs when the marginal social cost of air quality exceeds the marginal social benefit c. is greater if the marginal social benefit curve of air quality shifts rightward d. occurs when positive externalities are eliminated e. eliminates the common pool problem