A bond is selling for $1000 and it pays $150 in interest a year. If the interest rate changes to 20 percent, then
A. the price of the bond rises to $1250.
B. the interest payment rises to $175.
C. the interest payment falls to $75.
D. the price of the bond falls to $750.
Answer: D
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Max has allocated $100 toward meats for his barbecue. His budget line and an indifference map are shown in the above figure. What happens if Max's mother gives him 30 pounds of burger?
A) Max would have preferred receiving the dollar-value of the burger. B) Max is indifferent between this gift and the dollar-value of the burger. C) Max prefers this gift to the dollar-value of the burger. D) None of the above.
You overhear a businessman say: "We want to be big because there are economies associated with bigness." What he means is that
A. total fixed cost decreases as more is produced. B. total cost decreases as more is produced. C. marginal cost decreases as more is produced. D. long-run average cost decreases as more is produced.
Recall the Application about the price competition between satellite and cable TV services to answer the following question(s).Recall the Application. In most cases where satellite TV service is introduced in an area with cable TV service, if the price of cable TV decreases, then consumer surplus (in the cable TV market):
A. increases. B. decreases. C. drops to zero. D. becomes negative.
Which of the following statements is correct?
A. Federal deficits were larger in the early 2000s than in the late 2000s. B. Deep tax cuts always expand tax revenues and reduce the public debt. C. The public debt has usually declined during wartime. D. There is a tendency for the public debt to grow during recessions.