If you have a business opportunity that is pretty much a sure thing that will require you to borrow $1,000,000, but will return to you $200,000 a year in profit for ten years, this is
A. an unwise investment regardless of interest rates.
B. an investment which depends on the interest rate that must be paid on the loan.
C. a wise investment regardless of interest rates.
D. an investment which will be more attractive when the interest rate is high.
Answer: B
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A decreased government deficit created by a lump-sum tax increase will increase national saving if
A) the value of government bonds outstanding grows slower than the public's wealth. B) it causes consumption to fall. C) the government runs a primary surplus as a result. D) the real interest rate is less than the growth rate of real GNP.
Total benefits minus total cost equals:
A. gross benefit. B. marginal benefit. C. net benefit. D. incremental benefit.
Net capital outflow
a. is always greater than net exports. b. is always less than net exports. c. is always equal to net exports. d. could be any of the above.
Suppose a country institutes an investment tax credit and that leads to an initial increase in investment spending of $100 billion. Suppose the multiplier is 1.5 and the economy's real GDP is $5,000 billion. This action is
A) expansionary and will shift the aggregate demand curve to the right by $750 billion. B) expansionary and will shift the aggregate demand curve to the right by $150 billion. C) expansionary and will shift the aggregate demand curve to the left by $7500 billion. D) expansionary and will shift the aggregate demand curve to the left by $150 billion.