The Federal Reserve can decrease the money supply by:
A. conducting open market purchases.
B. introducing deposit insurance.
C. decreasing the discount rate.
D. increasing reserve requirements.
Answer: D
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To determine the change in the capital stock, the level of new investment must be adjusted for depreciation because some new investment
A) is not used immediately. B) replaces existing workers. C) is more efficient than existing capital. D) merely replaces existing, but worn out, capital.
Suppose a manager of a firm is considering investing in a piece of equipment that will generate $20,000 in future operating profit each year for the next three years. The discount rate is 5 percent and the salvage value of zero. The equipment's current cost is $50,000 and this cost will be financed by the firm. If the tax rate on the firm's profit is 4 percent each year, what is the net present
value of the equipment? A) $4,464 B) $2,286 C) $3,569 D) -$2,581
Economists use what term to describe the want-satisfying power of a good?
A) demand B) utility C) marginal propensity to consume D) income elasticity
Using the saving/investment approach to equilibrium, the equilibrium condition can be written as
A. C - S = I. B. C = S + I. C. C + S = I. D. C + I = C + S.