The table above gives the aggregate demand and aggregate supply schedules in Lotus Land. In short-run equilibrium, there is ________
A) an inflationary gap of $100
B) a recessionary gap of $100
C) a recessionary gap of $200
D) an inflationary gap of $200
B
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If the price of diamonds is expected to decrease, all else equal, then the demand for diamonds ________ and the demand for platinum ________
A) decreases; increases B) decreases; decreases C) increases; increases D) increases; decreases
Much of a person's increased productivity can be linked to
A) on-the-job training. B) the prevalent marginal tax rate. C) the price elasticity of demand for the product. D) the income elasticity of demand for the product.
For an imaginary economy, when the real interest rate is 5 percent, the quantity of loanable funds demanded is $100,000 and the quantity of loanable funds supplied is $100,000 . Currently, the nominal interest rate is 6 percent and the inflation rate is 2 percent. Currently,
a. the market for loanable funds is in equilibrium. b. the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, and as a result the real interest rate will rise. c. the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, and as a result the real interest rate will fall. d. the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, and as a result the real interest rate will rise.
Suppose you purchase a call option to purchase General Motors common stock at $80 per share in March. The current price of GM stock is $83 and the time value of the option is $5. What is the intrinsic value of the option? As the expiration date approaches, what will happen to the size of the time value of the option?
What will be an ideal response?