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Question
Why are policymakers willing to use rules for monetary policy as general guides, but unlikely to follow such rules blindly?Answer
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An investor buys a stock for $10,000 and earns dividends of $250 during the course of the year. At the end of the year, the stock is worth $9,300. The dividend yield for the year isa. −2.5 percent. b. 5 percent. c. 5 percent. d. −7.0 percent.
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The amount foreign citizens, firms, and governments invest in a country minus the amount that the country's citizens, firms, and governments invest abroad isa. the trade balance.b. the balance on current account. c. the capital-account balance.d. the balance on capital and financial account.
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The sum of net exports of goods and services plus net income from abroad plus net unilateral current transfers equalsa. the trade balance.b. the balance on current account. c. the capital account balance.d. the capital and financial account balance.
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If only one good is traded between two countries and the price of the good is the same in both countries when expressed in units of the same currency, thena. people have rational expectations.b. both countries have the same monetary policy. c. there is interest-rate parity.d. the law of one price holds.
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Investment spending on physical capital is about of aggregate demand. a. 1/10b. 1/6 c. 1/4 d. 1/2
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A rise in income will cause consumer spending to a. decline.b. not change. c. rise.d. fall at first, then rise later.
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The total amount of physical capital in all firms and households is called the a. human capital.b. capital stock.c. household income. d. physical product.
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Suppose that a risk-neutral investor has a choice between buying a one-year bond paying 5 percent today, a two- year bond paying 4 percent today, a three-year bond paying 8 percent today, or a four-year bond paying 2 percent today, if a one-year bond purchased one year from now is expected to have an interest rate of 6 percent, a one-year bond purchased two years from now is expected to have an interest rate of 7 percent, and a one-year bond purchased three years from now is expected to have an interest rate of 8 percent. Explain with the help of suitable calculations, which of the following would the investor decide to do?a. The investor will purchase a one-year bond today, followed by three successive one-year bonds. b. The investor will purchase a two-year bond today, followed by two successive one-year bonds. c. The investor will purchase a three-year bond today, followed by a one-year bond.d. The investor will purchase a four-year bond today.
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What does a flat yield curve imply, according to the expectations theory of the term structure of interest rates?a. The price level will not change in the future. b. Future long-term rates are expected to rise. c. Future long-term rates are expected to fall.d. Future short-term rates are not expected to change.
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