One year before maturity, the price of a bond with a principal amount of $1,000 and a coupon rate of 5% paid annually fell to $981. The one-year interest rate must be:
A. 8.5%.
B. 5.0%.
C. 7.0%.
D. 1.9%.
Answer: C
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People who attend college for four years in order to equip themselves to earn higher incomes in later life are
A) discounting the future at a higher rate than do people who don't attend college. B) giving up future satisfaction for the sake of current satisfaction. C) ignoring the fact that future income has less value than current income. D) investing in human capital. E) revealing a high rate of time preference.
Refer to Table 2-12. What is Guatemala's opportunity cost of producing one canoe?
A) 1/6 of a sailboat B) 2/3 of a sailboat C) 6 sailboats D) 7.5 sailboats
International trade in the U.S. during the antebellum period
(a) benefited the Northern economy more than the Southern economy. (b) benefited England significantly more than the U.S. (c) played an important part in the growth and expansion of the Southern economy. (d) occurred as described in all of the above.
If the Fed follows a policy of fixed exchange rates, an undervalued dollar will force the Fed to
a. conduct open market purchases. b. raise the discount rate. c. raise the required reserve ratio. d. cut taxes or raise government spending.