You lend a friend $20,000 for a year at an annual interest rate of 5%. At the end of the year your friend must pay you ________ in interest.
A. $133
B. $750
C. $1,000
D. $1,900
Answer: C
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In the equation, GDP = C + I + G + X - M, G refers to
A) federal government expenditures plus all transfer payments. B) local, state, and federal government spending for all purposes. C) the taxes and expenditures of all government units. D) local, state, and federal government expenditure on goods and services, but does not include transfer payments.
Incentives are
A) potential rewards available if a particular activity is undertaken. B) ineffective as a device to get people to behave in a certain fashion. C) inappropriate ways to obtain a certain kind of behavior. D) useless when people behave rationally.
Rebel Records announces it is cutting the prices of its bluegrass album titles by 25 percent. If Rebel is seeking to increase revenues, it must believe that the elasticity of demand for bluegrass albums is
a. elastic. b. inelastic. c. of unitary elasticity. d. perfectly inelastic.
Which of the following combinations of nominal interest rates and inflation implies a real interest rate of 7 percent?
a. a nominal interest rate of 5 percent and an inflation rate of 4 percent. b. a nominal interest rate of 4 percent and an inflation rate of 3 percent. c. a nominal interest rate of 8 percent and an inflation rate of 1 percent. d. a nominal interest rate of 14 percent and an inflation rate of 2 percent.