We have learned from this chapter that the real value of the debt is eroded by inflation and may be overestimated because of it and other factors. Do you feel that the debt will be a major concern during your working lifetime and retirement?
What will be an ideal response?
Although answers will vary, the debt will be an area for concern. The most troublesome portion
will be the increasing share of debt held by foreign investors. Other obligations, such as
Medicare and Social Security, will have a greater impact.
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The following table shows the relationship between the speed of a computer's CPU and its benefits and costs. Assume that all other features of the computer are the same (that is, CPU speed is the only source of variation), and only the CPU speeds listed below are available for purchase.CPUGHzTotal BenefitMarginal BenefitTotal CostsMarginal Costs2.0$1,000 $900 2.5$1,400 &1003.0 $300$1,200 3.5$1,900 &1,500 4.0$2,000 &400The total benefit of a 3.0GHz computer is:
A. $900. B. $300. C. $1,700. D. $1,650.
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
If the interest rate is 7 percent, what is the present value of $100 received two years from now
a. $107 b. $114.49 c. $87.34 d. $93.45
A lender is promised a $100 payment (including interest) one year from today. If the lender has a 6% opportunity cost of money, he/she should be willing to accept what amount today?
A. $100.00 B. $94.34 C. $106.20 D. $96.40