Answer the following statement true (T) or false (F)
1) Unlike most demand curves, the demand curve for loanable funds is upsloping.
2) Present value is the amount to which some current amount of money will grow as interest
compounds over time.
3) The time-value of money refers to the idea that a given amount of money is more valuable to a
person the sooner it is received.
4) The future value of $3,000 deposited today at 5 percent interest is $3,646.52 four years from
now.
5) The present value of $4,000 deposited today at 8 percent interest is $5,038.85 three years
from now.
1) F
2) F
3) T
4) T
5) F
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The price effect is smaller when there:
A. are fewer firms. B. are more firms. C. is more demand. D. is less demand.
If the expected price level exceeds the actual price level in an economy, _____
a. firms increase production in the short run b. firms decrease production in the short run c. firms maintain production in the short run but increase prices d. firms maintain production in the short run but decrease prices e. firms raise prices in the short run.
Kris, Taylor and Max are the only three residents in a neighborhood. A public good that would benefit all of them has a one-time installation cost of $900. The value of the public good to each resident is shown in the table below. Any tax plan must be approved by simple majority. ResidentReservation PriceIncomeKris$100$1,000Taylor$200$5,000Max$700$6,000 If the government proposes to pay for the public good with a proportional income tax of 8 percent, then:
A. Kris and Max will vote in favor of the tax, but Taylor will vote against it. B. all three voters will vote against the tax. C. Max and Taylor will vote against the tax, but Kris will vote in favor of it. D. all three voters will vote in favor of the tax.
If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?
A. The quantity of beef demanded will decrease. B. The quantity of beef supplied will increase. C. There will be a surplus of beef. D. There will be a shortage of beef.