How does a budget deficit lead to a trade deficit?
a. The trade deficit triggers higher interest rates, which increase the budget deficit.
b. The budget deficit leads to higher interest rates and exchange rates, which shrink net exports.
c. The trade deficit causes lower interest rates, which leads to economic recession and a budget deficit.
d. The budget deficit causes lower exchange rates, which decrease net exports.
b
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If the interest rate rises to 25% would the investment still take place?
a. Yes since NPV>0 b. No since NPV<0 c. Yes since the present value of the cash flows is greater than zero d. No since the present value of the cash flows is lesser than zero
Both intermediate and final goods are counted as part of GDP.
Answer the following statement true (T) or false (F)
Assume the production of a good causes a negative externality. In the market equilibrium, the marginal consumer values the good at
a. less than the social cost of producing it. b. less than the private cost of producing it. c. more than the social cost of producing it. d. more than the private cost of producing it.
What happens when you make a purchase using a credit card?
(A) The money is immediately deducted from your account. (B) The amount of the purchase is deducted from a prepaid account. (C) The credit card issuer pays the store. (D) The place where you made the purchase receives the money within 24 hours.