The higher the interest rate, the greater the:
A. Both present value and net present value are correct.
B. Neither present value nor net present value is correct.
C. present value.
D. net present value.
Answer: B
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The following is a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant.Units of ResourceTotal Product124242354464572If the product the firm produces sells for a constant $2 per unit, the marginal revenue product of the third unit of the resource is
A. $12. B. $18. C. $6. D. $24.
When using the income approach to measure GDP at market prices, in addition to summing all factor incomes it is necessary to ________
A. subtract depreciation because profit is not reported as net profit B. add depreciation because capital depreciates when goods are manu-factured C. add indirect taxes less subsidies to convert aggregate income from factor cost to market prices D. add a statistical discrepancy which is the sum of depreciation and in-direct taxes less subsidies
Municipal bonds have default risk, yet their interest rates are lower than the rates on default-free Treasury bonds. This suggests that
A) the benefit from the tax-exempt status of municipal bonds is less than their default risk. B) the benefit from the tax-exempt status of municipal bonds equals their default risk. C) the benefit from the tax-exempt status of municipal bonds exceeds their default risk. D) Treasury bonds are not default-free.
Using Figure 1.5 above, we know the production of 2 units of soda and 2 units of pizza is 
A. impossible because we have the technology but do not have the resources. B. possible, but there would be unemployed resources. C. impossible because we have the resources but do not have the technology. D. possible, but only if all resources were fully employed.