The liquidity premium theory holds that investors
A) always choose the bond with the highest expected return, regardless of maturity.
B) require a term premium to compensate them for investing in a less preferred maturity.
C) view bonds of different maturities as perfect substitutes.
D) view bonds of different maturities as completely unsubstitutable.
B
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Which of the following statements is true about voting results if preferences are intransitive?
a. The result of voting never reflects majority preferences. b. It is impossible to predict the outcome when preferences are intransitive. c. The person who sets the agenda (sequence of votes) may be able to control the outcome. d. Only a Borda Count yields a unique result when preferences are intransitive.
In a dynamic economy under ideal conditions,
a. the unemployment rate should be near zero. b. some unemployment would be present due to workers temporarily being out of work while changing jobs. c. unemployment would tend to move upward slightly as prices increased. d. unemployment would tend to move slightly downward as unemployment compensation benefits increased.