Problem set 1 Solution
1. Because money was losing value at a slower rate (the inflation rate was lower) in the
1950s than in the 1970s, it was a better store of value then, and you would have been
willing to hold more of it.
2. Even if he or she is a non
1.1 Why Study Financial Markets?
1) Financial markets promote economic efficiency by
A) channeling funds from investors to savers.
B) creating inflation.
C) channeling funds from savers to investors.
D) reducing investment.
Ques Status: Previous
1.5 Appendix: Defining Aggregate Output, Income, the Price Level, and the
1) The most comprehensive measure of aggregate output is
A) gross domestic product.
B) net national product.
C) the stock value of the industrial 500.
D) national inc