Problems and Applications Q9 Investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit. True or False: It is difficult to implement both of these policies at the same time because reducing taxes on private spending has the effect of increasing the government budget deficit. True False What would you need to know in order to judge which of these two policies would be a more effective way to raise investment

If the demand for a pair of shoes is given by 2p + 5q = 200 and the supply function for it is p − 2q = 10, compare the quantity demanded and the quantity supplied when the price is $90. quantity demanded pairs of shoes quantity supplied pairs of shoes will there be a surplus or shortfall at this price? there will be a surplus. there will be a shortfall.

What is an example of a good stock to buy in a recession? a) cyclical stock b) defensive stock c) income stock d) bond

Consider a treasury bill with a rate of return of 5% and the following risky securities: security a: e(r) = .15; variance = .0400 security b: e(r) = .10; variance = .0225 security c: e(r) = .12; variance = .1000 security d: e(r) = .13; variance = .0625 the investor must develop a complete portfolio by combining the risk-free asset with one of the securities mentioned above. the security the investor should choose as part of her complete portfolio to achieve the best cal would be a. security a b. security b c. security c d. security d