Buying a diversified mutual stock fund allows you to
A) completely avoid all types of risk.
B) avoid only random, unsystematic risk.
C) avoid only systematic risk.
D) avoid risk only when all the stock prices are perfectly correlated.
B
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Assume a firm uses two inputs, capital and labor. All else constant, an increase in the price of labor would create an incentive for the firm to:
A) substitute labor for capital in its production function. B) substitute capital for labor in its production function. C) hire more capital and labor. D) hire less capital while holding the amount of labor employed constant.
The vertical long-run Phillips curve
a. shows the Fed's employment options b. is vertical because the Fed refuses to change the unemployment rate in the long run c. indicates that the Fed cannot affect the unemployment rate in the long run d. is fixed permanently e. measures recessionary pressures