How does a lower price alleviate the problem of excess supply?
A. A lower price increases the number of potential sellers and the number of potential buyers.
B. A lower price decreases the number of potential sellers and increases the number of potential buyers.
C. A lower price increases the number of potential sellers and decreases the number of potential buyers.
D. A lower price decreases the number of potential sellers and the number of potential buyers.
Answer: B
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If you own a $1,000 face value bond with one year remaining to maturity and a 3 percent coupon rate and new bonds are paying 9 percent, what is the most you can get for your old bond?
A) $917.43 B) $944.95 C) $970.87 D) $1,000
Devaluation of a currency stimulates exports
Indicate whether the statement is true or false
An economy in a downward phase of the business cycle will, according to internal cycle theory,
a. continue on its downward path unless the government intervenes b. continue on its downward path unless technological innovation occurs c. continue on its downward path unless consumption spending increases d. eventually recover because capital stock wears out and needs replacement e. eventually recover because saving rates fall
Which of the following examples shows inelasticity?
a. When the price of diamonds increases 8 percent, the quantity demanded decreases 20 percent. b. When the price of avocados increases 3 percent, the quantity demanded decreases 4 percent. c. When the price of camcorders increases 10 percent, the quantity demanded decreases 5 percent. d. When the price of bicycles increases 5 percent, the quantity demanded decreases 8 percent.