If the interest rate is 10 percent per year, and you have $100,000 now, which of the following is closest to what your $100,000 will be worth in one year?
A. $105,000
B. $100,000
C. $110,000
D. $102,000
Answer: C
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Car insurance and cars are complements. If the price of car insurance increases, the
A) demand for cars decreases. B) demand for cars increases. C) quantity of cars demanded decreases. D) quantity of cars demanded increases. E) More information is needed to determine if the demand increases or decreases.
Refer to Figure 5-5. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does D2 represent?
A) the demand curve reflecting the sum of social and external benefits B) the demand curve reflecting social benefits C) the demand curve reflecting private benefits D) the demand curve reflecting external benefits
During the expansion phase of the business cycle, households become optimistic about their future earning capacity as do banks. Nominal interest rates rise during expansions. Mortgage lending could be expected to
A) rise if the change in future earnings is thought to be greater than the change in interest rates. B) stay the same. C) fall. D) fall if the change in future earnings is thought to be greater than the change in interest rates.
To simplify our consumption models, suppose U.S. consumers only purchase food and all other goods where food is plotted along the horizontal axis of the indifference map
Also, suppose that all states initially impose state sales taxes on all goods (including food), but then the states exempt food from the state sales tax. How does this tax policy change alter the consumer's budget line? A) Makes the budget line steeper B) Makes the budget line flatter C) Parallel rightward shift D) Parallel leftward shift E) none of the above