Arnold is considering purchasing a business for $100,000 . It will pay him an annual return of $8,000 . If the interest rate is 10 percent, should he buy the business? What if the interest rate was 6 percent?
Given only the above information, we should advise Arnold not to purchase the business. Based on a simple interest calculation, he can get a $10,000 return elsewhere. If the interest rate was 6 percent, he may wish to consider making the purchase. Other factors, such as tax liability, will also influence this decision.
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Which of the following will cause demand to be relatively elastic?
a. There are few substitutes b. The time interval is relatively long c. The good is considered a necessity d. The good involves a relatively small portion of the consumers' budget e. The time interval is relatively short
A difficulty with effective fiscal policy is the:
A. reality of time lags. B. guess as to what potential GDP is. C. lack of relevant information needed to decide the magnitude of change. D. All of these are true.
Efficiency wages, minimum-wage laws, and unions all keep wages
a. below the equilibrium level, causing a shortage of labor. b. below the equilibrium level, causing a surplus of labor. c. above the equilibrium level, causing a shortage of labor. d. above the equilibrium level, causing a surplus of labor.
The discount rate is the interest
A. rate at which the central banks lend to the United States Treasury. B. rate at which the Federal Reserve Banks lend to commercial banks and thrift institutions. C. yield on long-term government bonds. D. rate at which commercial banks and thrifts lend to the public.