Which of the following bonds would you prefer to be buying?
A) a $10,000 face-value security with a 10 percent coupon selling for $9,000
B) a $10,000 face-value security with a 7 percent coupon selling for $10,000
C) a $10,000 face-value security with a 9 percent coupon selling for $10,000
D) a $10,000 face-value security with a 10 percent coupon selling for $10,000
A
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Which of the following statements is TRUE about the difference between the public debt and the government budget deficit?
A) The public debt is a flow measure and the government budget deficit is not a flow measure. B) There is no relationship between the public debt and the government budget deficit since one is a stock measure and the other is a flow measure. C) The public debt always increases while the government budget deficit may increase or decrease. D) The public debt for this year will increase or decrease depending upon whether there is a government budget deficit or a government budget surplus.
When considering the demand for money curve, the interest rate
A) is the price of holding money. B) varies negatively with the transactions demand for money. C) will have a positive relationship with the quantity of money demanded. D) is independent of the opportunity cost of money.
Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a complement for oatmeal. Which of the following increases the demand for oatmeal?
A) an increase in the price of raisins B) a decrease in income C) a decrease in population D) an increase in the price of cold cereal
A rise in interest rates will increase your incentive to
A) save more, borrow less, and pay off credit card debt. B) consume now, borrow more, and save later. C) buy more things on credit and postpone savings. D) borrow money to buy a new car.