Pigou buys a house for $500,000, rents it for $2,000 per month for four years, and then sells it for $600,000. What is Pigou's per-year rate of return?
A. 4.8 percent.
B. 9.8 percent.
C. 20 percent.
D. 39.2 percent.
B. 9.8 percent.
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The use of incentive payments for salespeople combats
A) both adverse selection and moral hazard. B) neither adverse selection nor moral hazard. C) adverse selection but not moral hazard. D) moral hazard but not adverse selection.
Assume that consumption when young and consumption when old are both normal goods. The income effect of an increase in the interest rate will result in
a. an increase in saving when young. b. an increase in saving when old. c. a decrease in saving when young. d. a decrease in saving when old.
Corporations account for
A. the largest amount of taxes paid to the U.S. government. B. the smallest amount of revenues in the United States. C. the largest number of firms in the United States. D. the largest proportion of business revenues generated in the United States.
When the policy rate hits its lower bound and inflation keeps falling, this portion of the aggregate demand curve is
A) downward sloping. B) upward sloping. C) flat. D) undetermined.