The GDP chain price index is designed to adjust nominal GDP for changes in:
a. the level of transfer payments.
b. the quality of goods over time.
c. the costs of economic bads such as pollution and crime.
d. the general level of prices over time.
d
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The "monopoly issue" is concerned with the fact that
(a) monopolies will "charge what the traffic will bear" in order to maximize their profits. (b) monopolies will attempt to increase their profits by discriminating among their customers and charge prices that they are willing to pay, instead of charging one price. (c) monopolies will be able to charge higher prices and earn higher rates of return than competitive firms. (d) all of the above apply.
If a good is Giffen and its price increases,
a. the income effect will be positive and the substitution effect will be positive. b. the income effect will be negative and the substitution effect will be negative. c. the income effect will be positive and the substitution effect will be negative. d. the income effect will be negative and the substitution effect will be positive.
Figure 7-9
At a price of $10, the price elasticity of the demand curve depicted in is
a.
positive.
b.
approximately equal to -0.1.
c.
approximately equal to -1.
d.
approximately equal to -2.
Compute the present value of a preferred stock that pays, in perpetuity, an annual cash flow of $200 at an annual interest rate of 5 percent.
A. $190.48 B. $4,000 C. $210 D. $4,200