If you own a $1,000 face value bond with one year remaining to maturity and a five percent coupon rate and new bonds are paying 12 percent, what is the most you can get for your old bond?
A) $1,120
B) $1,000
C) $937.50
D) impossible to determine without additional information
C
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Citicorp charges an 11 percent interest rate on all new car loans. If the inflation rate is 6 percent, Citicorp receives a real interest rate of
A) 11 percent. B) 6 percent. C) 1.83 percent. D) 0.54 percent. E) 5 percent.
A mandatory tax that both workers and employers in the United States pay to fund Social Security and Medicare is the
A) corporate income tax. B) individual income tax. C) payroll tax. D) excise tax.
Under the gold standard, to increase the money supply in the country, the government must
A) increase the value of the country's currency on foreign exchange markets. B) simply print more currency. C) have enough gold to back up the increase in the money supply. D) buy foreign currencies with dollars to increase foreign currency reserves.
If the deficit is 0.02 times GDP, the existing debt—GDP ratio is 0.5, and the growth rate of nominal GDP is 0.03, then the change in the debt—GDP ratio is
A) +0.05 B) +0.025. C) 0. D) -0.025.