On January 1, 2010, a homeowner borrowed $5,000 for a term of six months to complete some home improvements, paying an annual interest rate of 8 percent. How much principal and interest will the homeowner pay back on July 1, 2010?
A. $2,500
B. $2,900
C. $5,200
D. $5,400
Answer: C
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Consider two lottery winners, Tino who is 65 years old and Sasha who is 32 years old. Which of these two would be expected to have the larger income effect, all else equal?
A) Sasha B) Tino C) Both would have no income effect. D) Both would have equal income effects.
Suppose that John allocates $10,000 of his disposable income for necessities. Any additional income beyond that is both spent and saved. Assume he has a disposable annual income of $50,000 and an MPC=0.8. Based on this information the amount of money John should save would be:
A. $10,000. B. $40,000. C. $12,000. D. $8,000.
If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, the maximum quantity of X the consumer is able to purchase is:
A. 20. B. 10. C. 5. D. 40.
When the government taxes a firm that generates external costs, the firm will produce
A. fewer units of output than before the tax was imposed in order to continue maximizing profits. B. more units of output than before the tax was imposed in order to continue maximizing profits. C. the same number of units of output as before the tax was imposed to continue maximizing profits. D. either more or fewer units of output than before the tax was imposed depending upon what happens to the profit-maximizing level of output.