Mary purchases a U.S. Treasury bond; the bond is a(n):
A. asset of the U.S. government as well as an asset for Mary.
B. asset for the government but a liability for Mary.
C. asset for Mary but not a liability of the U.S. Government.
D. liability of the U.S. government and an asset for Mary.
Answer: D
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The demand for a good is unit elastic with respect to price if the price elasticity of demand is:
A. equal to one. B. greater than one. C. greater than negative one. D. less than one.
Which of the following examples, ceteris paribus, would most likely shift the U.S. aggregate demand curve to the right?
a. Canada experiences an economic slowdown and reduces its consumption of U.S. goods. b. The U.S. dollar appreciates in value due to heavy investing by foreign investors. c. The prices for U.S. goods increase compared to the prices in other countries. d. An economic boom in Mexico leads to an increase in imports of U.S. goods.
Under the expectations hypothesis, bonds of different maturities are assumed to be perfect substitutes because:
A. market forces would always have long-term interest rates equal the average of the current and expected short-term rate. B. the risk premium is assumed to be negative. C. expectations of future interest rates are uncertain and therefore cannot be included in the analysis. D. bond markets are very liquid.
According to David Ricardo's explanation of land rent, what happens when the demand for land increases?
A) The supply curve shifts to the right just enough to keep the price per acre constant. B) Revenues to owners of land increase but economic rent declines. C) The amount of economic rent stays constant, constrained by a perfectly inelastic supply curve. D) Both revenues to owners of land and economic rent increase.