Explain why "good news for the economy is bad news for bond prices."
What will be an ideal response?
When real GDP increases, the demand for money will increase. The increased demand for money will increase interest rates. Since bond prices move in the opposite direction from interest rates, when interest rates increase, as they do when the real GDP is growing, bond prices will decrease.
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If you expect a general price increase of 5% this year and the price of the hamburgers you sell increases by 10%, you would conclude that the relative price of your good has
A) declined, and you would increase your output. B) declined, and you would decrease your output. C) increased, and you would increase your output. D) increased, and you would decrease your output.
Refer to Scenario 10.4. Given the information above, what are the profit maximizing number of tickets sold and the price of tickets?
A) 0, $60 B) 20,000, $50 C) 40,000, $40 D) 60,000, $30 E) 80,000, $20
How many households in the United States receive their incomes mainly from the business sector?
A. 300 million B. 117 million C. 50 million D. 39 million
Exhibit 15-1 Production possibilities curves
In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. In Pada the cost of producing one more unit of corn is equal to:
A. 3 units of wheat. B. 3 units of corn. C. 1/3 unit of wheat. D. 15 units of wheat.