A risk premium is
A. lower the more risky the future stream of profits.
B. an additional compensation paid to the workers of a business enterprise.
C. subtracted from the discount rate when calculating the present value of a future stream of profits.
D. a measure calculated to reflect the riskiness of future profits.
Answer: D
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If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced
A) bowed out B) linear C) bowed in D) non-linear
Which of the following is most likely to happen if the demand for money decreases in the domestic economy under floating exchange rates and free capital mobility?
A. The average price level in the domestic economy will decrease. B. The domestic interest rate will increase. C. Domestic borrowing will decline. D. The financial account of the country's balance of payments will deteriorate.
What is the relationship between accounting and economic profits?
A. Economic profits are always negative. B. Accounting profits are always larger than economic profits. C. There is no relationship between economic and accounting profits. D. Economic profits are always larger than accounting profits.
If interest rates in the European Union decrease
A. the demand for euros will fall in the foreign exchange market. B. the demand for U.S. dollars will fall in the foreign exchange market. C. nothing will change in the foreign exchange market. D. the supply of U.S. dollars will fall in the foreign exchange market.