A lottery promises a $250,000 prize. But the prize money is paid out in $50,000 annual installments with the first installment received today.. The winner is offered the option of an immediate lump-sum payment. If the interest rate remains at 10 percent for the entire period, what is the smallest amount the winner should accept?
a. $189,540
b. $192,970
c. $208,494
d. $225,000
c
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Which of the following is included in both M1 and M2?
A) currency B) savings deposits C) small-denomination time deposits D) money market deposit accounts
Assume the marginal propensity to consume (MPC) is 0.80 and the government increases taxes by $100 billion. The aggregate demand curve will shift to the:
a. left by $80 billion. b. right by $200 billion. c. right by $400 billion. d. left by $400 billion.
A major advantage of automatic stabilizers is that they: a. guarantee that the federal budget will be balanced over the course of the business cycle. b. require no legislative action by Congress to take effect
c. simultaneously stabilize the economy and reduce the size of the public debt. d. automatically produce surpluses during recessions and deficits during economic booms.