In 1985, Alice paid $20,000 for an option to purchase ten acres of land. By paying the $20,000, she bought the right to buy the land for $100,000 in 1992. When she acquired the option in 1985, the land was worth $120,000
In 1992, it is worth $110,000. Should Alice exercise the option and pay $100,000 for the land? A) Yes.
B) No.
C) It depends on what the rate of inflation was between 1985 and 1992.
D) It depends on what the rate of interest was.
A
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Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?
A) Demand is likely to be perfectly elastic. B) Demand is likely to be relatively elastic. C) Demand is likely to be relatively inelastic. D) Demand is likely to be perfectly inelastic.
A negative demand shock
a. shifts the AD curve to the right b. decreases real GDP and increases the price level in the short run c. is the result of an increase in money demand d. results in a movement down and to the right along the AD curve e. decreases both real GDP and the price level in the short run
If the marginal propensity to consume decreases, the marginal propensity to save decreases
a. True b. False Indicate whether the statement is true or false
Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert. This suggests that:
A. the production possibilities curves of such nations are more bowed out from the origin. B. the production possibilities curves of such nations have shifted inward. C. the production possibilities curves of such nations have shifted outward. D. these nations are operating at some point outside of their production possibilities curves.