If a local government collects taxes of $250,000, has $175,000 of government consumption expenditures, makes transfer payments of $75,000, and has no interest payments or investment, its budget would
A. show a surplus of $100,000.
B. show a deficit of $75,000.
C. be in balance with neither a surplus nor a deficit.
D. show a surplus of $75,000.
Answer: C
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A share of stock is a
A) certificate of ownership and claim to the profits made by a firm. B) collection of funds that travels the world looking for the highest return. C) form of investment in physical capital. D) set of demanders and suppliers for the savings of households. E) promise to pay specified sums of money on specified dates.
In a two-period model with default, the nation defaults on its debt in the current period if
A) the market interest rate is high, the cost of defaulting is low, and national debt is high. B) the market interest rate is low, the cost of defaulting is low, and national debt is high. C) the market interest rate is high, the cost of defaulting is high, and national debt is low. D) the market interest rate is low, the cost of defaulting is high, and national debt is low.
You are an American resident but have invested in a German bond (paying face value) that matures in two years, pays a 5 percent interest rate and is denominated in euros. What could cause your rate of return to fall below 5 percent even though the bond pays off at maturity?
What will be an ideal response?
Problems in forecasting include:
A. estimates becoming more reliable the further you forecast into the future B. cyclical variation C. specification error D. both b and c E. all of the above