A bond that pays a yearly interest rate of $100 is for sale. The interest rate was 10 percent and now is 5 percent. The price of the bond has
A. increased from $1000 to $2000.
B. decreased from $1000 to $500.
C. decreased from $2000 to $1000.
D. increased from $500 to $2000.
Answer: A
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An attempt by a central bank to alter the money supply by buying or selling domestic assets
A) will leave both domestic money supply and foreign reserves unchanged. B) will cause an offsetting change in aggregate demand. C) will lead to a rise in domestic employment and output. D) will lead to a decrease in domestic employment and output. E) will cause an offsetting change in foreign reserves and leave the domestic money supply unchanged.
What would happen if a perfectly competitive firm decided to raise its prices by 1%?
a. The firm would increase revenues by 1%. b. The firm would increase market share by 1%. c. The firm would lose all of its market to its competitors. d. The firm would put all of its competitors out of business.
A supply and demand model is a:
A. model that considers only important feedback effects. B. path-dependent model. C. model that considers all feedback effects. D. model that does not consider feedback effects.
Related to the Economics in Practice on p. 36: In all societies, resources are limited relative to people's demands, and there are ________ trade-offs individuals face in rich countries versus poor countries.
A. virtually no differences in the types of B. large differences in the kinds of C. more important D. fewer