An example of a public transfer payment is a(n):
A. veteran's benefit payment.
B. airline pass giving price discounts to senior citizens.
C. monthly allowance from home for a college student.
D. gift of land from a wealthy relative.
Answer: A
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Joe's Taco Hut can purchase a delivery truck for $20,000 and Joe estimates it will generate a net income (after taxes, maintenance and operating costs) of $4,000 per year. His other option is to go to work for someone else earning net income of $3,000 per year. He should:
A. purchase the truck if the real interest rate is less than 5%. B. not purchase the truck if the real interest rate is greater than 1%. C. purchase the truck if the real interest rate is less than 15%. D. purchase the truck if the real interest rate is greater than 5%.
Ariel is a Canadian citizen who works in Montreal, Canada and owns a winter home in Palm Beach, Florida. When Ariel spends the winters in Palm Beach, an increase in the value of the Canadian dollar relative to the U.S. dollar should
A) hurt Ariel as it is now more expensive to live in Palm Beach since the Canadian dollar appreciation. B) help Ariel as each Canadian dollar of her salary is now worth more U.S. dollars. C) hurt Ariel as each Canadian dollar of her salary is now worth less U.S. dollars. D) help Ariel as it is now less expensive to live in Canada since the Canadian dollar appreciation.
As wages and prices become more flexible ________
A) wages becomes less responsive to unemployment deviations from the natural rate B) it becomes easier to differentiate the short-run from the long-run Phillips curve C) inflation becomes more responsive to unemployment deviations from the natural rate D) all of the above E) none of the above
If the demand for money increases and the Fed wants interest rates to remain unchanged, which of the following would be appropriate policy?
A. Recall Federal Reserve Notes from circulation. B. Raise the legal reserve requirement. C. Buy bonds in the open market. D. Raise the discount rate.