If the price of a U.S. government bond is? $50 and the owner of the bond is entitled to? $2.50 income each? year, then the interest rate on the bond is? ______.

If an individual is maximizing his or her utility, his or her marginal rate of substitution of leisure hours for consumption will be:

a. equal to one divided by his or her wage rate. b. greater than one divided by his or her wage rate. c. equal to his or her wage rate. d. less than his or her wage rate.

Based on the graph showing an increase in the growth of the money supply, if the economy maintains a 6 percent inflation rate for a fairly long time, people’s expectations will adjust and move the economy from ______.

a. point B to point A
b. point B to point C
c. point C to point A
d. point C to point B

If the quantity demanded for good A increases from 40 to 60 when price decreases from $9 to $7, price elasticity of demand in this price range is 1.6.

Answer the following statement true (T) or false (F)

The so-called G-8 is one group that sometimes influences the exchange rates between major currencies. For example, in 2000 the G-8 governments agreed to sell U.S. dollars in order to:

A. Counter the depreciation of the euro B. Counter the depreciation of the U.S. dollar C. Support the appreciation of the Swiss franc D. Support the appreciation of the Japanese yen