Which of the following has a present value of $100?
a. $109.12 in two years when the interest rate is 4 percent
b. $113.98 in two years when the interest rate is 6 percent
c. $116.64 in two years when the interest rate is 8 percent
d. $123.17 in two years when the interest rate is 10 percent
c
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A rise in the price level has a direct effect on spending because
A) the real value of the money people have decreases and they can buy less with it. B) a higher price gives people more money, and so the more goods and services they can buy. C) the real value of the money people have varies directly with the price level. D) people like to spend more when prices are higher.
Firms maintain their completive edge by
a. Providing a good at lower costs than their rivals b. Providing a superior product at the same cost as your rival c. Being innovative d. All the above
To eliminate an inflationary gap, Keynesian theory indicates that government should
A) increase taxes. B) decrease taxes. C) increase government purchases. D) decrease government purchases. E) either a or d
If resources are limited
a. people will rush to buy more goods that they would otherwise b. businesses will sell more products that they would otherwise c. choices must be made which involve tradeoffs d. all individuals are deprived of basic necessities