You own a tract of trees and are deciding whether to harvest them now or next year. If you harvest them now, you can invest the proceeds and get a return of 5% on your investment. What should you do?
a. Let the trees grow as long as their dollar worth increases by more than 5%
b. Let the trees grow
c. Cut down the trees, and sell them
d. Let the trees grow as long as their dollar worth increases by less than 5%
a
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What is a credit card?
A) Money B) A convenient way to borrow money C) A bond D) A convenient way to sell a bond
In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank can loan an additional
A) $280 million. B) $200 million. C) $100 million. D) $360 million.
During the recession phase of the business cycle, households become pessimistic about their future earning capacity as do banks. Nominal interest rates fall during recessions. Mortgage lending could be expected to
A) rise if the change in future earnings is thought to be greater than the change in interest payments. B) stay the same. C) fall. D) fall if the change in future earnings is thought to be greater than the change in interest payments.
Static tax analysis assumes that
A) an increase in a tax rate may lead to a decrease in the tax base. B) an increase in a tax rate will lead to an increase in the tax base. C) an increase in a tax rate will leave the tax base unchanged. D) the tax base will always remain unchanged.