Prices of Money Market Instruments Undergo the Least Price Fluctuations

question 45

Multiple Choice

Prices of money market instruments undergo the least price fluctuations because of

• A)the short terms to maturity for the securities.
• B)the heavy regulations in the industry.
• C)the price ceiling imposed by government regulators.
• D)the lack of competition in the market.

---

Definitions:

Long-run Equilibrium

A state where all the factors of production in an economy are being used in the most efficient way, leading to a situation where there is no tendency for change.

Perfectly Competitive Market

An economic model marked by a multitude of buyers and sellers, with no barriers to entering or leaving, and identical products.

Average Total Cost

The sum of average fixed costs and average variable costs, representing the total cost of production divided by the quantity of output.

Long-run Equilibrium

A state in which all factors of production are fully adjustable, markets are perfectly competitive, and economic agents have no incentive to change their behavior.