Government's role of taxing some citizens and transferring income to others is considered:
A) enforcing a legal system.
B) providing certain goods and services.
C) redistributing income.
D) maintaining the money supply.
Ans: C) redistributing income.
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The Fisher equation implies that an increase in the nominal rate of interest relative to the real rate indicates that ________
A) inflation is expected to rise B) inflation is expected to decrease C) the real cost of borrowing has increased D) the real cost of borrowing has decreased E) none of the above
In a market system, incomes are distributed according to the:
a. principle of equality. b. directions of a central authority. c. needs of the people. d. ownership of resources. e. objectives of a planning commission.
The internal rate of return is likely to lead to incorrect decisions.
A. True B. False C. Uncertain
Hannah and Marla plan to drive cross-country in Marla’s car after graduation and split the estimated $300 gas costs and 30 hours of driving. Their friend Sarah asks to join the trip and split the costs. Which of the following accurately describes the difference between average and marginal costs of adding a third traveler to the trip?
a. Average costs are increased from $300 to $450; marginal costs are reduced to 10 hours of driving per person. b. Average costs of travel remain the same; marginal costs are increased by Sarah’s share of beverages and snacks. c. Average costs fall from $150 to $100 per person; marginal costs are minimal and offset by Sarah’s help with driving. d. Average costs are increased by adding a third person; marginal costs are unchanged because the car is already going.