Why might two Fortune 500 companies borrow the same amount of money for the same term at the same time yet both pay a very different interest rate even when the same banks makes both loans?
What will be an ideal response?
The reasons that interest rates are different have to do with many other factors than the ones mentioned. Most notably the credit-worthiness of the firm will play a role and the expected ability of the firm to be able to satisfactorily pay back the loan.
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One of the shortcomings of the Solow model is that it
A) treats technological change as freely available to all countries. B) does not treat technological change as freely available to all countries. C) treats technological change as an endogenous variable. D) treats technological change as the only source of economic growth.
Which of the following is not a form of crowding out?
a. Lower household spending due to higher interest rates b. Lower business spending due to higher interest rates c. Lower net exports due to higher interest rates d. Lower private spending due to higher taxes e. Greater output and employment in the short run
Stockholders normally obtain higher expected payments than bondholders because
a. they are required by law to obtain a higher return. b. they face higher risk. c. the profit share declared as stock dividends is not taxable. d. they vote themselves higher returns.
Game theory is not useful for analyzing perfectly competitive markets.
Answer the following statement true (T) or false (F)