Suppose a bond sells for $2,000 and pays $200 per year in interest. What will happen to the current interest rate if the price of the bond changes to $1,800?
a. It decreases by 10 percentage points.
b. It increases by 10 percentage points.
c. It remains unchanged.
d. It increases by 1 percentage point.
e. It decreases by 1 percentage point.
d
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Suppose that the price of a plasma TV is $1,200 in the United States and 13,200 pesos in Mexico. If the current exchange rate is 10 pesos to the dollar, then purchasing power parity theory would predict that in the long run
A. the exchange value of the dollar will depreciate. B. the exchange value of the peso will depreciate. C. Mexico will begin to import plasma TVs from the United States. D. the exchange value of the peso will appreciate.
Partial factor taxes are levied on an input in only some of its uses.
A. True B. False C. Uncertain
An immediate depreciation allowance is referred to as ________ and it ________ the tax shield.
A) expensing the investment; increases B) straight-line depreciation; decreases C) straight-line depreciation; increases D) expensing the investment; decreases
The slope of a line parallel to the vertical axis is:
A. zero. B. one. C. infinite. D. one-half.