Using the annuity rule, it follows that an annuity with a present value of $100 and an annual payment of $20 must have an interest rate of:
A. 10 percent.
B. 20 percent.
C. 5 percent.
D. 2 percent.
Answer: B
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From this chapter we know that a profit maximizing competitive firm will set its price equal to the market price. Briefly describe why a profit maximizing competitive firm will not set its price above the market price. Also, describe why a profit maximizing competitive firm will not set its price below the market price.
What will be an ideal response?
Which of the following does NOT lead to an increase in potential GDP?
A) labor force grows B) technological change takes place C) new machinery and equipment are installed D) aggregate expenditures increase
The effect that a gift given to a U.S. citizen from a foreign resident will have on the balance of payments is to
A) increase the current account balance. B) have no effect on the balance of payments if the gift was made in the U.S. C) have no effect on the balance of payments if the gift was made by a foreign country. D) decrease the balance of payments.
During the mid-1980s, we observed a significant reduction in oil prices. In the United States, we would expect that this reduction in oil prices would cause
A) a larger reduction in the CPI compared to the GDP deflator. B) an equal reduction in the CPI and GDP deflator. C) a larger reduction in the GDP deflator compared to the CPI. D) no change in the CPI and a reduction in the GDP deflator.