Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. What are Tom's accounting profits?
A. $50,000
B. $24,000
C. $35,000
D. $6,000
C. $35,000
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In contrast with nominal GDP, real GDP refers to nominal GDP:
a. minus exports. b. minus personal income taxes. c. corrected for price changes. d. corrected for depreciation.
An economic model:
A. exactly explains what happens in the real economy. B. approximates all facets of what happens in the real economy. C. does not make clear assumptions about the economic activity. D. discards unnecessary details to clearly demonstrate the central principles of the economic activity.
Suppose the money multiplier is 5. If banks hold excess reserves, the required reserve ratio must:
A. equal 0.20. B. be less than 0.10. C. be greater than 0.20. D. be less than 0.20.
As of April 2015, the Fed no longer holds any mortgage-backed securities or federal agency debt securities as assets.
Answer the following statement true (T) or false (F)