Newspaper reports about good news in the economy are often followed by declines in stock and bond prices because
a. the Fed reacts in anticipation of the news to prevent speculation
b. financial markets are often irrational
c. financial markets prefer recessions to spending shocks
d. stock and bond holders fear the Fed's reaction to possible overheating
e. newspapers may be confused about the performance of financial markets
D
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The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?
A) $1.00 B) $2.50 C) 2/5 of a Russian tea cake D) 2 1/2 Russian tea cakes
If a price floor of $23 were placed in the market in the graph shown:
A. a shortage of 37 would occur.
B. a shortage of 10 would occur.
C. a shortage of 27 would occur.
D. None of these would occur.