A loan covenant is a guarantee provided by the directors of a company that a term loan will be repaid by the maturity date.
a. true
b. false
Answer is b. false (It is an agreement stipulating the terms and conditions of loan policies between a borrower and a lender in other words it is simply a clause in the loan agreement that requires the borrower to do or refrain from doing, certain things. )
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In an open economy, increases in government spending can crowd out consumption, investment, or net exports
Indicate whether the statement is true or false
Suppose a country has a real interest rate of 4 percent and an inflation rate of 3 percent. If the income tax rate is 20 percent, then the after-tax real interest rate is
A) 2.6 percent. B) 7.0 percent. C) 5.6 percent. D) 4.0 percent. E) 1.4 percent.
Because the United States does not have a comparative advantage in producing clothing, a fall in world prices increases imports and ________ U.S. production. U.S. consumers ________ and U.S. producers ________
A) decreases; gain; gain B) increases; gain; lose C) increases; gain; gain D) decreases; gain; lose E) decreases; lose; lose
What is the free-rider problem? What results from the free-rider problem? What is a solution to the free-rider problem?
What will be an ideal response?