Suppose that you and two friends have an opportunity to purchase a pizza restaurant. Each of you would put up $75,000 . The revenue from the restaurant is expected to remain $200,000 per year for the next several years
The costs (not including the opportunity costs of your investment) of operating the restaurant are expected to remain steady at $185,000 for the next several years. The current market rate of interest is 7 percent per year. Should you go in on this deal? Explain.
The expected profit from the restaurant is $15,000 per year. If the profits are divided equally among the three partners, this amounts to $5,000 per year. This is a 6.67 percent rate of return on the initial $75,000 investment. Since the expected rate of return is less than the market rate of interest, you should not go in on the deal.
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Looking at the U.S. balance of payments from 1980 to 2012, we see that the
A) official settlements account was large in the 1980s relative to the current account. B) capital and financial account has been negative for most years and was small in the late 1980s and early 1990s. C) current account has been negative for most years and was small in the late 1980s and early 1990s. D) current account was positive until 1992 then turned negative. E) current account was negative until 1992 then turned positive.
When the value of the British pound changes from $1.25 to $1.50, the pound has ________ and the U.S. dollar has ________
A) appreciated; appreciated B) depreciated; appreciated C) appreciated; depreciated D) depreciated; depreciated
A competitive equilibrium
A) is always economically efficient. B) is efficient only if there is an externality. C) is economically efficient only given some special conditions. D) does not exist without government taxation.
If the Fed conducts open-market purchases, then which of the following quantities increase(s)?
a. interest rates and investment spending b. interest rates, but not investment spending c. investment spending, but not interest rates d. neither interest rates nor investment spending