A higher interest rate will lead a firm to purchase less capital because the higher interest rate
a. lowers the marginal product of capital goods
b. causes technological change to cease
c. lowers the present value of capital goods
d. causes economies of scale to be exhausted
e. causes the capital market become monopolized
C
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Mortgage-backed securities are large blocks of mortgages which have been repackaged into ________ and sold to pension funds and other large investors
A) stocks B) bonds C) mutual funds D) certificates of deposit
One year ago, Ms. Case and Mr. Bond opened a jewelry store called T & J. They invested $1,000,000 of their savings into the partnership to buy equipment and initial inventory
They rented a building for $90,000 a year, and hired two employees for an annual wage of $40,000 each. Case and Bond believed that the best alternative investment of their money would be government bonds, which could yield an annual return of 8 percent. To run the store, Case quit her previous job, at which she earned $100,000, but her former boss told her that she was welcome to return anytime. Bond kept his job with the government, but gave up 6 hours of leisure each week (for 50 weeks), the time he used to spend playing golf. Bond used to say: "I'd only give up my golf time if someone paid me $100 an hour." During the first year of operation, T & J paid $20,000 for utilities and the firm's total revenue was $350,000. The market value of T & J's equipment was $200,000 at the beginning of the year and $170,000 at the end of the year. a) What is the economic depreciation of their capital? b) What are T & J's opportunity costs? c) What is the firm's economic profit in the first year of operation?
Increased liquidity in the banking system occurs when ________
A) people buy more bonds B) the demand for real money balances declines C) banks buy more bonds from the central bank D) all of the above E) none of the above
Liquidity can be defined as the
a. cash value of money. b. value of money adjusted for inflation. c. value of fiat money when used for spending. d. ease with which an asset can be converted to a spendable asset.