Firm A has assets that are mainly in financial securities and whose liabilities carry variable interest rates; Firm B has the same assets as Firm A and the same amount of liabilities but its liabilities are all at fixed interest rates. If the central bank lowers interest rates, everything else constant:
A. Firm A's net worth will increase more than Firm B's.
B. Firm B's net worth will increase more than Firm A's.
C. Neither firm's net worth will change.
D. The net worth of both firms will increase and by the same amount.
Answer: A
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An increase in autonomous consumption means that
A) the consumption function shifts down. B) the consumption function shifts up. C) the consumption function becomes steeper. D) the consumption function becomes less steep.
An indifference curve provides the set of consumption alternatives that
A. can be purchased for the same amount of money. B. maximize the utility of the consumer. C. yield the same marginal utility for the last unit consumed of each good. D. yield the same total amount of satisfaction.
Both Kate and John own saltwater taffy factories. Kate's factory has low fixed costs and high variable costs. John's factory has high fixed costs and low variable costs. Currently, each factory is producing 1,000 boxes of taffy at the same total cost. Complete the following statement with the correct answer. If each produces
A. less, the costs of Kate's factory will exceed those of John's factory. B. more, the costs of Kate's factory will exceed those of John's factory. C. less, their costs will be equal. D. more, their costs will be equal.
A country cannot achieve economic growth with a limited base of natural resources.
Indicate whether the statement is true or false.