Pat pays $10,000 for a newly issued two-year government bond with a $10,000 face value and a 6 percent coupon rate. One year later, after receiving the first coupon payment, Pat sells the bond. If the current one-year interest rate on government bonds is 5 percent, then the price Pat receives is:
A. $10,000.
B. greater than $10,000.
C. less than $10,000.
D. $500.
Answer: B
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An effective price ceiling tends to
A) increase quantity supplied. B) decrease quantity demanded. C) leave quantity supplied and demanded unchanged. D) do none of the above.
Macroeconomic equilibrium occurs when:
a. Expected amount supplied equals expected amount demanded, which means expected leakages equal expected injections. b. Leakages equal injections. c. Supply equals demand and Leakages equal injections. d. Expected and actual supply equals expected and actual demand, which means expected and actual leakages equal expected and actual injections. e. None of the above.
The world's two main free trade areas (or organizations) are ____________ and ________________.
Fill in the blank(s) with the appropriate word(s).
Suppose that Harold buys collision insurance for his car and then drives it recklessly. This is an example of:
A. a positive spillover. B. moral hazard. C. adverse selection. D. irrational behavior.