An open market ________ by the Fed decreases the money supply, which leads to ________ interest rates and a fall in investment spending.
A. sale; increased
B. sale; decreased
C. purchase; increased
D. purchase; decreased
Answer: A
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Consider debt-equity swaps as an approach to debt reduction. Briefly describe how this works. State two arguments in favor of significant reliance on this strategy and two arguments against
What will be an ideal response?
Mister Jones was selling his house. The asking price was $220,000, and Jones decided he would take no less than $200,000. After some negotiation, Mister Smith purchased the house for $205,000. Smith's consumer surplus is
A) $5,000. B) $15,000. C) $20,000. D) not able to be calculated from the information given.
Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Fred's opportunity cost to produce one cake is
A) one-half pie. B) two pies. C) six pies. D) four pies.
Generally, investors expect that projects with high expected net present values also will be projects with
a. low risk b. high risk c. certain cash flows d. short lives e. none of the above