Answer the following statement(s) true (T) or false (F)
1. A borrower sells bonds, and a lender buys bonds.
2. A change in the price of bonds causes a change in interest rates.
3. A bond that promises a series of payments on different dates is a perpetuity.
4. It would be irrational to promise to make an infinite number of payments in exchange for a finite amount of goods.
5. The present value of a perpetuity falls when the interest rate rises.
1. True
2. False
3. False
4. False
5. True
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The principle of comparative advantage states that a product should be exported by
a. the country with the lowest dollar cost b. the country with the lowest labor cost c. the country with the lowest opportunity cost d. the country that has more of that product e. all of the above
If all the world's resources were to magically increase one hundredfold, then:
A. economics would no longer be relevant. B. people would still have to make trade-offs. C. scarcity would disappear. D. trade-offs would become unnecessary.
According to adaptive expectations theory, expansionary monetary and fiscal policies to reduce the unemployment rate are:
A. useless in the long run. B. useless in the short run. C. ineffective on the price level. D. successful at achieving the desired outcomes.
Refer to the graph below.
Laura's production possibility curve for math and economics problems in one night is shown in the graph. Her opportunity cost of finishing six math problems instead of four math problems is:
A. one economics problem. B. three economics problems. C. four economics problems. D. two economics problems.