If the discount rate is 5 percent, the present value of annual $100,000 payments in perpetuity (i.e., continued indefinitely into the future) is
a. $2,000,000
b. $1,246,296
c. $1,000,000
d. $976,463
e. infinite
A
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You are given the following information on the various sectors of the economy. Derive the aggregate expenditure function
C = 100 + 0.75Y I = 200 + 0.20Y G = 500 X = 250 M = 100 + 0.10Y
Suppose that when the price of milk rises 10%, the quantity demanded of milk falls 2%. Based on this information, what is the approximate absolute price elasticity of demand for milk?
A) 5.0 B) 0.2 C) 0.5 D) 2.0
In the upward-sloping segment of the aggregate supply curve,
a. when GDP increases, the price level rises. b. when GDP increases, the price level does not change. c. when GDP decreases, the price level rises. d. when GDP increases, the price level falls. e. there is no relationship between changes in GDP and changes in the price level.
If a bank has excess reserves,
a. its reserves are greater than its liabilities. b. it can make a loan if it wishes. c. it cannot make a loan if it wishes. d. it must borrow from the Fed.