You use $2,000 of your own money to start a dog-sitting service. During the first year you earn a 10% return on your investment. If the current interest rate is 7%, you earn an economic profit of
A. $60.
B. $140.
C. $200.
D. $340.
Answer: A
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Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and reserve-related (central bank) transactions remain the same. b. The real risk-free interest rate rises, and reserve-related (central bank) transactions remain the same. c. There is not enough information to determine what happens to these two macroeconomic variables. d. The real risk-free interest rate falls, and reserve-related (central bank) transactions become more negative (or less positive). e. The real risk-free interest rate falls, and reserve-related (central bank) transactions become more positive (or less negative).
An industry with Herfindahl-Hershman Index of 4,000 would best be described as
A. perfect competition. B. monopoly. C. monopolistic competition. D. oligopoly.
Opportunity cost can be best defined as
A. all sunk costs. B. the value of the best alternative given up when making a choice. C. the explicit cost of an activity. D. the cost of making one additional unit.
If you invest $4,000 in a savings account paying 3 percent interest, how much will your investment be worth in 25 years?
What will be an ideal response?