Economists use the term "financial markets" to mean the markets in which
A) households supply their labor services.
B) the government borrows to fund any budget surplus.
C) firms supply their goods and services.
D) firms purchase their physical capital.
E) firms get the funds that they use to buy physical capital.
E
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When property rights are well defined and inexpensive to enforce, ________
A) collateral is an efficient solution to asymmetric information problems B) little or no collateral is needed to secure a loan C) banks become less dominant among intermediaries D) poor borrowers are at no disadvantage relative to wealthy borrowers
Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if the Federal Reserve does not use monetary policy. If the Fed uses monetary policy successfully to keep real GDP at its potential level in 2017, which of the following will be higher than if the Fed had taken no action?
A) Real GDP and then inflation rate B) real GDP and the unemployment rate C) real GDP and potential GDP D) potential GDP and the inflation rate