A $100 bond, which matures in one year, has a price of $75. The interest rate on this bond is
A) 20%.
B) 25%.
C) 33 1/3%.
D) 50%.
Ans: C) 33 1/3%.
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The goal of the perfectly competitive firm is to
A) maximize total revenue. B) maximize total profits. C) minimize AFC. D) minimize ATC.
Which of the following would indicate the beginning of an expansionary phase in an economy?
a. A minor increase in the number of new firms b. A decline in stock market prices c. An improvement in consumer confidence d. A slowdown in housing construction e. A decrease in the number of orders for new equipment
The CPI and an Individual's Cost of Living
- Why does the mix of goods that you buy determine how well the CPI explains the effect of inflation on the purchasing power of your income?
- Why does geographical location have an effect on how well the CPI measures changes in your cost of living?
- Suppose that the price of heating oil rises at twice the rate of inflation. For which portions of the country would the CPI overstate the effect of inflation? For which portions of the country would the effect of inflation be understated?
Use the following table for a hypothetical single-product economy. year units of output price per unit price index (1=100) 1 10 10 100 2 12 20 200 3 15 30 300 4 20 40 400 Refer to the above data. Nominal GDP in year 3 is:
a) $100. b) $450. c) $225. d) $150.