The present value of a payment of $500 to be made two years from today is greater if the interest rate is 7% than if it is 6%
a. True
b. False
Indicate whether the statement is true or false
False
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The Fed was committed to keeping interest rates low to assist Treasury financing of budget deficits
A) only during World War I. B) during the Great Depression. C) during World War I and World War II. D) throughout the entire existence of the Fed.
A food truck operator originally produced hamburgers and hotdogs. To serve the tastes of their various customers, the hot dog vendor decides to start producing turkey dogs and ham sandwiches as well. Since the new products were introduced, average costs rose dramatically. The vendor is experiencing
a. Economies of scale b. Economies of scope c. Diseconomies of scale d. Diseconomies of scope
The Department of Education noticed that for loans granted to students without any strings, the average grade point average of the students decreases dramatically over time, while the students whose loans renew only if they pass their courses tends to stay stable. This could be due to a
a. Adverse selection problem b. Moral hazard problem c. Typical college life phenomenon d. None of the above
The expenditure multiplier explains how a change in
A. real GDP leads to a change in induced expenditure. B. induced expenditure leads to a change in real GDP. C. real GDP leads to a change in autonomous expenditure. D. autonomous expenditure leads to a change in real GDP. E. induced expenditure leads to a change in autonomous expenditure.