Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. Refer to Scenario 13-4. Abdul’s explicit cost of capital is
a. $8,000.
b. $4,000.
c. $2,000.
d. $1,000.
Answer: a. $8,000.
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Which of the following best defines the vicious circle of poverty?
a. Countries are poor because they cannot afford to save and invest. b. Countries are poor because of high population growth. c. Countries are poor because of lack of education and training for workers. d. Countries are poor because of poor international credit.
An affordable housing law will affect a city's housing prices only if:
a. the demand for houses in the city is downward sloping. b. the demand for houses in the city is almost horizontal. c. the demand for houses in the city is almost vertical. d. the demand for houses in the city is backward bending.
Which of the following statements is valid when the market supply curve is vertical?
a. Market quantity supplied does not change when the price changes. b. Supply is perfectly elastic. c. An increase in market demand will increase the equilibrium quantity. d. An increase in market demand will not increase the equilibrium price.
During this century, court decisions on antitrust have:
A. changed from per se, to rule of reason, and back to per se. B. changed from rule of reason, to per se, and back to rule of reason. C. always emphasized per se. D. always emphasized rule of reason.