Assume a perfectly competitive firm is producing a level of output at which MR? < MC. What should the firm do to maximize its? profits?

Because most asset yields are affected in a systematic way by economic conditions, most securities in portfolios

A) have a covariance greater than zero. B) have negative yields. C) have covariance greater than one. D) increase in risk as new assets are added.

Which of the following correctly distinguishes an active versus passive policy approach?

a. An active policy approach is restricted to open-market operations by the Fed, while a passive policy approach includes changes in the required reserve ratio, and fiscal stimulus in the form of government spending. b. An active policy approach is used to close a contractionary gap, while a passive policy approach is used to close an expansionary gap. c. An active policy approach is based on monetary aggregate targets, while a passive policy approach is addressed to interest rate stability. d. An active policy approach is based on the notion that discretionary fiscal or monetary policy can reduce the costs imposed by an unstable private sector. A passive approach is based on the idea that discretionary policy contributes to the instability of the economy and thus is part of the problem.