The implication of the expectations theory that expected returns for a holding period must be the same for bonds of different maturities depends on the assumption that
A) yield curves usually slope upward.
B) yield curves usually slope downward.
C) instruments with different maturities are perfect substitutes.
D) savers are usually risk averse.
C
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The productivity curve shifts upward when
A) technology advances. B) physical capital increases. C) hours of labor increase. D) hours of labor decrease. E) human capital decreases.
A perfectly competitive firm can
A) sell all of its output at the prevailing market price. B) set a higher price to customers who are willing to pay more. C) raise its price in order to increase its total revenue. D) sell additional output only by lowering its price. E) usually not sell all the output it produces, but still "over-produces" because there are some periods when it can sell the extra output at very profitable prices.