Creditors require collateral in many cases, because
A. the loan is small.
B. the borrower is a low risk.
C. it helps offset the risks of lending the funds.
D. none of these.
Answer: C
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In the circular flow model with the government sector, transfers
A) flow only through the goods market. B) flow in the same direction as do taxes. C) flow in the opposite direction as do taxes. D) to firms flow in the same direction as do rent, wages, interest, and profits. E) to households flow in the same direction as do expenditures on goods and services.
A firm bought a pizza oven for $13,500 and if it shut down now, could sell the oven for $9,500. Which of the following statements is TRUE?
A) The relevant cost of the oven when considering shutting down is $13,500. B) The relevant cost of the oven when considering shutting down is $9,500. C) The relevant cost of the oven when considering shutting down is $4,000. D) The cost of the oven does not matter when deciding whether or not to shut down.
If a firm is earning negative economic profits, it implies
a. That the firm's accounting profits are zero b. That the firm's accounting profits are positive c. That the firm's accounting profits are negative d. More information is needed to conclude about accounting profits
A fall in the price of capital goods will shift the aggregate:
a. Supply curve leftward b. Demand curve leftward c. Supply curve rightward d. Demand curve rightward