Question

1. Which of the following is the most liquid asset?

   	A.	certificate of deposit
   	B.	checking account
   	C.	stocks
   	D.	bonds

1 points   

QUESTION 13

1. When oligopolistic firms in an industry come together to form a cartel, then it is most likely that

   	A.	industry output will decrease while prices will increase.
   	B.	industry output will increase while prices will decrease.
   	C.	both industry output and prices will decrease.
   	D.	both industry output and prices will increase.

Answer 1

The liquidity of an asset is denoted by how quickly it can be transfered to cash money. Money is the most liquid form of an asset.

Given the options :

• The certificate of deposit is a form of asset that has fixed time of maturity and before that it cannot be turned into money.
• Checking account is account of the consumer held at bank. A customer can take out fund any time it need liquid cash.
• Stocks are IOU with fixed maturity and cannot be used in transaction.
• Bonds are IOU with fixed maturity.

Therefore the correct option is : B

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In oligopoly firms in the industry compete with each other to set quantity and total market quantity decide the price. The oligopoly price is less than monopoly price. If the oligopoly form a cartel, the market becomes monopolistic. The price in the monopolist market is higher than oligopoly and as price rises quantity falls atthenew equilibrium.

Given the options:

• Industry output decreases as firm tries to maximize profit. As quantity ফল price rises.
• Industry output decreases but do not increases.
• Industry output cannot both move in same direction in imperfect competition.
• In imperfect competition both output and price cannot move in opposite direction.

Therefore the correct option is : A