Interest can be defined as
A. the amount of funds loaned to a creditor.
B. the return paid to owners of capital.
C. the return above opportunity cost paid to owners of a firm.
D. the participation of a shareholder in the operations of a firm.
Answer: B
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The quality change bias is most likely to put ________ into the CPI and so ________ the inflation rate
A) a downward bias; understate B) an upward bias; understate C) an upward bias; overstate D) a downward bias; overstate E) a random bias; randomly overstate or understate
Which of the following is one reason why trade makes all parties better off? a. Because it always expands the amount of domestic production of each good and service, and more is preferred to less. b. Because it permits all parties to acquire some items better suited to their tastes
c. Because it makes people appreciate what they have, and they are happier. d. Because it encourages consumption rather than saving.
The ICP index:
A. is an imperfect measure because of cultural differences. B. is an imperfect measure because of typical weather and geographical differences. C. uses a broad market basket that tries to represent the full cost of living across countries. D. All of these statements are true.
Refer to Figure 2. If this economy moved from point C to point E,
a. it still would not be producing efficiently.
b. it was inefficient before but now it is producing efficiently.
c. it would be producing more barrels and more bathtubs than at point C.
d. It is not possible for this economy to move from point C to point E without additional resources.