The relationship between quantity supplied and the price of output is such that
A) an increase in quantity will automatically lead to a reduction in price.
B) an increase in price will lead to an increase in quantity supplied.
C) an increase in price will produce an inward shift in the supply curve.
D) quantity will decrease as the number of firms increases.
B
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What are the advantages of bank deposits compared to other types of assets?
What will be an ideal response?
Suppose the nominal yield on interest rates during the next two years was expected to remain at 10%, but the yield on a one-year security was 10% and on two-year securities was 8%. Investors would:
a. Borrow for one year, invest for two years, and, at the end of the first year, roll over the loan. b. Probably do nothing, because markets are efficient, which means there is no way to arbitrage the markets. c. Borrow for two years, invest for one year, and then roll over the investment at the end of the first year. d. Borrow for two years and invest for two years, but at the end of the first year, re-borrow and re-invest at the market rate. e. Borrow for one year and invest for one year, but at the end of the first year, re-borrow and re-invest the borrowed funds at the expected rate.