If the interest rate is 5 percent, what is the present value of $100 that will be received 3 years from now?
A) $90.70
B) $86.38
C) $115.00
D) $13.62
B
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
For the purchasing power of money to increase, the price level has to fall
Indicate whether the statement is true or false
Which of the following is true of the law of supply?
a. The law of supply is the sole determinant of market prices. b. The law of supply states that as the price of a good rises, the quantity supplied rises. c. The law of supply holds good only in the long-run. d. The law of supply is valid only in a market system of allocation. e. The law of supply asserts that as the cost of producing a good rises, the quantity supplied rises.
Related to the Economics in Practice on p. 51: The Amazon Kindle and the electronic textbooks available for the Kindle are complementary goods. Electronic textbooks and traditional, hard-copy textbooks are substitute products. If the price of the Kindle decreases
A. the quantity of Kindles demanded increases and demand for electronic textbooks increases. B. demand for the Kindle increases and demand for traditional, hard-copy textbooks decreases. C. the quantity of Kindles demanded increases and the quantity of electronic textbooks demanded increases. D. demand for the Kindle increases and the quantity of electronic textbooks demanded increases.