Alternate Assignment link

For the 60 Minutes interview with Fed Chair Ben Bernanke:

http://www.cbsnews.com/stories/2009/03/12/60minutes/main4862191.shtml

Answer questions on the handout received in class on July 23.

In defense of question 7 from quiz 1

The following is question 7 from the first test.

7. A financial asset is:
A) a tangible asset like a car
B) a claim that entitles the owner to future income from the seller
C) the value of accumulated savings
D) all of the above


The correct answer is (B).

The question is seeking a definition. (A) A car is not an asset. It is a good consumed over time. It may retain some value but it tends to depreciate. (Only in the very exceptional case that a car becomes "historical" will it appreciate. This is a grand exception and also merely a possible example.) (C) can reflect the value of the set of all financial assets (note how it is plural and it refers to the value, that is, dollar value, of the set of assets) but does nothing to define what an asset is. (B) defines what an asset is.

The following statement also appears on the test: On the answer sheet provided, fill in the space corresponding to the best answer.

Given the statement above, I have no recourse but to accept (B) as the only possible answer.

Material covering quiz 2

You should study your notes and the following parts of the text:

Chapter 4: up to page 77. (However, the part that follows on price ceilings may be of interest, it comes up in the next chapter on "usury laws".)

Chapter 5: pp. 96 to end (Demand and Supply in Financial Capital Markets; Don't Kill the Price Messengers). No questions will be asked about labor markets.