The greatest constraint faced by banks considering the alternative of lending to Bangladeshi villagers is:
A. not having qualified loan officers to make the loans.
B. having limited funds available for loans.
C. not being able to determine appropriate currency exchange rates.
D. counterfeit Carfax reports that make it difficult to properly assess collateral.
B. having limited funds available for loans.
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A monopoly is a firm that is the only seller of a good or service that does not have a close substitute
Indicate whether the statement is true or false
All decisions of the Fed are subject to approval by: a. the President of the United States. b. the U.S. Congress
c. the FDIC d. none of the above
Reforming tax laws to encourage saving is motivated by which of the Ten Principles of Economics from Chapter 1?
a. The cost of something is what you give up to get it (Principle 2). b. Trade can make everyone better off (Principle 5). c. Markets are usually a good way to organize economic activity (Principle 6). d. A country's standard of living depends on its ability to produce goods and services (Principle 8).
Smyth Industries operated as a monopolist for the past several years, earning annual profits amounting to $50 million, which it could have maintained if Jones Incorporated did not enter the market. The result of this increased competition is lower prices and lower profits; Smyth Industries now earns $10 million annually. The managers of Smyth Industries are trying to devise a plan to drive Jones Incorporated out of the market so Smyth can regain its monopoly position (and profit). One of Smyth's managers suggests pricing its product 50 percent below marginal cost for exactly one year. The estimated impact of such a move is a loss of $1 billion. Ignoring antitrust concerns, compute the present value of Smyth Industries' profits, if it could have remained a monopoly when the interest rate
was 5 percent. A. $200 million B. $100 million C. $1.05 billion D. $210 million