Most power in the Federal Reserve System is held by the
A. president and Congress.
B. Secretary of the Treasury, who appoints the members of the Board of Governors.
C. Board of Governors of the system.
D. member banks of the system.
Answer: C
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When a demand curve is linear:
A. the elasticity is constant at all prices. B. demand is inelastic at low prices. C. demand is elastic at low prices. D. demand is unitary elastic at low prices.
Suppose a firm anticipates that a particular R&D expenditure of $100 million will result in a new product and thus create a one-time added profit of $108 million a year later. The firm will:
A. undertake the R&D expenditure if its interest-rate cost of borrowing is 12 percent. B. undertake the R&D expenditure if its interest-rate cost of borrowing is 10 percent. C. not undertake the R&D expenditure if its interest-rate cost of borrowing is 9 percent. D. not undertake the R&D expenditure if its interest-rate cost of borrowing is 7 percent.
Thompson Corporation is considering the purchase of a new piece of machinery. Thompson expects the new machinery to increase its revenues by $70,000 at the end of year 1, $60,000 at the end of year 2, and $50,000 at the end of year 3 at which point the
machinery will have exhausted its useful life. If the interest rate is 4%, what is the most Thompson should be willing to pay today for this piece of machinery?
In markets with perfect competition, no need for buyers & sellers to search for "true" market value of an asset; it is continuously revealed by transaction prices of _____________________.
Fill in the blank(s) with the appropriate word(s).