Suppose a manager is deciding whether or not to purchase a piece of equipment to make an input internally and has completed the majority of the net present value (NPV) calculations. The manager has correctly calculated the NPV to be equal to: NPV = ($1.082 × Q) - $200,000, where Q is the annual quantity of the input the firm needs. If the firm needs 175,000 units of the input each year, the
manager ________ buy the equipment because the NPV is ________.
A) should; positive
B) should not; negative
C) should; negative
D) should not; positive
B) should not; negative
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Which of the following will lower interest rates in the short run?
a. an increase in reserve requirements b. open market sales by the Fed c. a decrease in real GDP d. an increase in the price level
What effect does a compensated price change have on a consumer's well-being?
A. The consumer's well-being increases. B. The consumer's well-being decreases. C. The consumer's well-being is unaffected. D. The effect on the consumer's well-being cannot be determined without knowing the direction of the price change.
According to the law of increasing costs, as the United States expends more of its resources on reducing air pollution,
A. the quantity of other goods that must be given up for further reductions in air pollution will decrease. B. the quantity of other goods that must be given up for further reductions in air pollution will increase. C. the social cost of additional air pollution will increase. D. there will be no change in the marginal cost of reducing air pollution.
Who issues U.S. paper currency?
(A) The Treasury Department (B) The district Federal Reserve Banks (C) The U.S. bank examiners (D) The U.S. Mint