A key reason that firms and financial institutions might participate in an interest rate swap is
A) to transfer interest rate risk to parties that are more willing to bear it.
B) the low information costs of swaps compared with other derivative contracts.
C) the greater liquidity of swaps compared with other derivative contracts.
D) the favorable tax implications of swaps compared with other derivative contracts.
A
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When the economy suffers a temporary negative supply shock and the central bank responds by changing the autonomous component of monetary policy to keep inflation at the target inflation rate, then
A) aggregate output drops in the short run. B) output will return to potential output over time. C) aggregate output is stabilized. D) all of the above. E) both A and B.
Refer to the above table. What does the marginal revenue product equal when 26 workers are hired a week?
A) $8.50 B) $26 C) $221 D) $1190