In a market economy with no government intervention, the HOW to produce question is based on
A. Production costs plus environmental considerations.
B. Production costs alone.
C. Environmental considerations only.
D. Consumer demand.
Answer: B
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If a bank has excess reserves of $5,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has actual reserves of
A) $11,000. B) $20,000. C) $21,000. D) $26,000.
If the aggregate supply curve is upward sloping, then an increase in autonomous consumption leads to a(n)
A. no change in aggregate demand and no change in the price level. B. decrease in aggregate demand and a fall in the price level. C. increase in aggregate demand and a rise in the price level. D. decrease in aggregate demand and a rise in the price level.
A manager is considering investing in a new piece of equipment. The equipment cost $50,000 and the manager will finance the full amount of the cost over three years at an interest rate of 4 percent. In the third year, the manager will repay the entire principal of the loan plus the year's annual interest, after making interest-only payments for the first two years. The equipment will generate
$30,000 in future operating profit each of the three years and has a salvage value of zero at the end of the three years. The tax rate on the firm's profit is 8 percent each year. What is the net present value of the investment? A) $27,036 B) $20,589 C) $32,598 D) $35,852
A person who is, all else equal, more willing to throw away a $20 shirt than a $200 shirt, even if both are worn out, is:
A. dynamically inconsistent. B. dynamically consistent. C. demonstrating sunk cost fallacy. D. demonstrating pre-commitment.