The present value of $1 payable in the future decreases:
a. the higher r is and the sooner it is to be paid.
b. the lower r is and the sooner it is to be paid.
c. the higher r is and the longer time until it is paid.
d. the lower r is and the longer time until it is paid.
c
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The traditional Keynesian approach to fiscal policy assumes
A) exchange rates are fixed. B) the focus of attention should be the long run. C) prices are flexible while interest rates are not. D) current taxes are the only taxes taken into account by firms and consumers.
According to one study, the price elasticity of demand for cigarettes is 0.25. To decrease the consumption of cigarettes by 8 percent, a tax on cigarettes must raise the price of cigarettes by
A) 32 percent. B) 25 percent. C) 2 percent. D) 3.1 percent.
"The standard of living is too low for many individuals in the United States. The government should implement policies designed to achieve a more equal distribution of income." The preceding statements are
a. positive economic statements based on cause and effect. b. normative economic statements based on value judgments. c. based on the fallacy of composition argument. d. an empirically validated economic principle.
Predatory pricing
A. is usually quite effective at driving smaller firms out of a market. B. is illegal under antitrust laws. C. is a form of price leadership. D. is often an inexpensive way for a large firm to drive smaller firms out of a market.