In the following graph, the price of capital is $100 per unit; the price of labor is $25 per unit. How much does the seventh unit of output add to total cost?
A. nothing
B. $400
C. $800
D. $4,000
E. $8,000
Answer: B
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An investor in a 30% marginal tax bracket, earning $10 in interest annually for a $100 U.S. Treasury bond:
A. earns a 10% after-tax return because interest on U.S. Treasury bonds is tax exempt at the federal level. B. earns a 1% return after-tax. C. would be indifferent between this bond and a municipal bond offering $7 annually per $100 of face value, assuming the same default risk and liquidity characteristics. D. earns a 3% return after-tax.
The sum of consumption (C), investment (I), government spending (G), and net exports (X-M) is called:
A. autonomous spending. B. aggregate expenditures. C. Keynesian income D. wealth.
Each of the following statements is true except
A. Most of the world's largest corporate mergers took place between American firms. B. There have been more large mergers in the U.S. in the communications industry than in any other industry. C. The corporate scandals in recent years were all caused by no more than half a dozen crooks. D. The most important piece of antitrust legislation is the Sherman Antitrust Act.
Everything else fundamentally remaining unchanged, the monetary approach predicts that a 5 percent cut in the money supply by the Fed will result in
A. an increase in foreign investments by the Americans. B. an appreciation of the U.S. dollar vis-à-vis other currencies. C. inflation in the U.S. economy. D. a decrease in the market rate of interest in the United States.