What is the present value of a payment of $5,000 at the end of one year and a second payment of $7,000 at the end of two years if the interest rate is 5 percent?
A) $11,201.84
B) $10,985.14
C) $11,111.11
D) $12,250.32
C) $11,111.11
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Under a fixed exchange rate system, if the inflation rate in the United States is 5 percent a year and the inflation rate in Australia is 0 percent a year, then the U.S. real exchange rate will
A) increase 5 percent a year. B) decrease 5 percent a year. C) remain constant. D) possibly increase or decrease.
Changes in consumer confidence, business optimism, government spending, and foreign events that cause economic volatility are known as
A) Supply Shocks. B) Demand Shocks. C) Aggregate Demands. D) Real Business Cycles.
The factor that leads to underpricing and overuse of an economic resource is
a. human greed and selfishness. b. capital markets. c. the lack of an enforceable property right. d. the lack of understanding of pollution and its effects.
An economy produces 1,000,000 computers valued at $2,000 each. Households purchase 200,000 computers, of which 100,000 are imported. Businesses purchase 300,000 domestically produced computers, the government purchases 300,000 domestically produced computers, and 100,000 domestically produced computers are sold abroad. At the end of the year, the computer manufacturers hold the unsold computers in inventory. What is the value of GDP?
A. $3.8 billion B. $2.0 billion C. $1.8 billion D. $1.0 billion