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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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
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.
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.
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