The opportunity cost of an activity includes the value of:
A. the least-best alternative that must be foregone.
B. the chosen activity minus the value of the next-best alternative.
C. the next-best alternative that must be foregone.
D. all of the alternatives that must be forgone.
Answer: C
You might also like to view...
The only two ways of dealing with the principal agent problem are the use of long-term contracts and monitoring
Indicate whether the statement is true or false
Which of the following statements is false?
a. Political activities consistent with economic efficiency tend to emerge naturally from the unconstrained democratic political process. b. Constitutional rules establishing procedures and limiting the ability of the political process to engage in redistributive activities can improve the economic efficiency of government. c. Rent-seeking activity tends to retard the economic prosperity of a nation because it takes resources away from productive private sector activities. d. Unconstrained democratic governments often enact special-interest programs that waste resources and impair the standard of living of a country.
The advantage to a corporation of issuing bonds instead of stock is that
A. Bond prices do not fluctuate. B. The possibility of default is lower when bonds are issued. C. The owners do not have to make interest payments on the loan. D. The owners keep control of the company.
At the beginning of year one, there is no government debt outstanding. The government runs a $100 billion deficit in year one. Interest at a nominal rate of 10% must be paid starting in year two. Assume nominal GDP in year one is $2000 billion and the nominal growth rate of GDP is 4%. Assume the government balances its primary budget in the future and the interest rate and growth rate do not change.(a)What will be the government deficit in years two, three, four, and five?(b)What will be the value of government bonds outstanding at the end of the fifth year?(c)What will be the debt-GDP ratio at the end of year five?
What will be an ideal response?