Suppose you are deciding how much oil to pump from your oil well in the next ten years. If you know oil would sell for $5 per gallon in ten years and the real interest rate is about 4%, the present value of the opportunity cost of selling the oil today would be about
A. $4.00.
B. $2.50.
C. $0.
D. $3.38.
Answer: D
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Once a monopolistically competitive firm innovates, it is likely that:
A. it will enjoy long-run profits. B. other firms will rush to create similar, highly substitutable goods. C. it will need government protection to earn enough to cover its R & D costs. D. None of these is likely to happen.
The process of converting current dollar values into real terms is called ________, while the process of adjusting nominal quantities to maintain their purchasing power is called ________.
A. deflating; indexing B. deflation; inflation C. inflation; hyperinflation D. indexing; deflating
Internal balance can be graphically represented as the intersection of the IS curve with the LM curve
Indicate whether the statement is true or false
Suppose an initial increase in government expenditure increases output by $50,000 . If the size of the multiplier is 2.5, the size of the initial increase in government expenditure was: a. $25,000
b. $20,000. c. $12,5000. d. $1250. e. $30,000.