With regard to capital budgeting decisions, when the initial cash investment is compared against the present value of cash returns from the next best alternative, it is referred to as
a. opportunity cost
b. rate of return
c. internal rate of return
d. discounted payback rule
e. net present value
b. rate of return
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Under the gold standard, to increase the money supply in the country, the government must
A) increase the value of the country's currency on foreign exchange markets. B) simply print more currency. C) have enough gold to back up the increase in the money supply. D) buy foreign currencies with dollars to increase foreign currency reserves.
On a linear demand curve, the lower the price
A) the less elastic is demand. B) the more elastic is demand. C) the elasticity equals -1. D) the elasticity equals zero.
A newspaper headline reads: "Fed Raises Discount Rate for Third Time This Year." This headline indicates that the Federal Reserve is most likely trying to ________.
A. reduce the cost of credit B. stimulate the economy C. reduce inflationary pressures in the economy D. increase the money supply
Consider a consumer who spends all income on only two goods: pizza and soda. An extra slice of pizza would give the consumer 60 extra utils, while an extra can of soda would give the consumer 20 extra utils. Pizza costs $3 per slice, and soda costs $1 per can. In this situation, the consumer:
A. is buying too much pizza and not enough soda. B. should purchase more pizza and less soda. C. has maximized his or her total utility. D. needs to equate the marginal utilities for pizza and soda.