You borrow $75,000 at an interest rate of 3% to open Spinners, a bicycle shop. You will earn an economic profit if the return on your investment is
A. 6% or less.
B. between 0 and 3%.
C. greater than 3%.
D. 3%.
Answer: C
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The counterparty of someone buying a futures contract on the Chicago Board of Trade is::
A) Chicago Board of Trade B) hedger C) speculator D) trader
Which of the following statements about quotas is true?
A. Quotas provide some revenue to the government imposing them, while tariffs merely increase the wellbeing of foreign consumers. B. Quotas make consumers better off by ensuring that domestically manufactured products are of as high quality as possible. C. Quotas increase the quantity supplied by encouraging more domestic production. D. Quotas increase the price above the market equilibrium.
In general, oligopolists compete
A. on price alone. B. on price, R&D, and marketing and advertising. C. on many dimensions except for price. D. None of the above. There is no competition in oligopolistic industries.
Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140Assume that the MPC is 0.8 and the reserve requirement is 0.1. If the Federal Reserve needs to decrease aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 5%, then the Federal Reserve should ________ the money supply by ________.
A. decrease, $20 billion B. increase, $20 billion C. increase, $10 billion D. decrease, $10 billion