If a Market Is Perfect, Then

question 19

Multiple Choice

If a market is perfect, then

• A)it may be either efficient or inefficient.
• B)there will be higher bid-ask spreads.
• C)there may be arbitrage opportunities available, but no great bets.
• D)it must also be efficient.

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Definitions:

Depreciates

Describes a decrease in value over time, often used in reference to currency or physical assets.

Imports

Goods and services purchased from other countries and brought into a country.

Inflation

The speed at which the overall price level for goods and services increases, thereby diminishing buying power.

Floating Exchange Rates

A system in which currency values are allowed to fluctuate according to foreign exchange market mechanisms without direct intervention by the country’s government.