A decline in interest rates tends to expand the economy by
A. encouraging private investment and decrease in bank lending.
B. appreciating the currency and lowering the profitability criterion for investments.
C. decreasing the cost of capital and reducing net exports.
D. depreciating the currency and raising net exports.
Answer: D
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If demand is unit elastic, then a 10 percent increase in the price will lead to a 10 percent increase in quantity demanded.
Answer the following statement true (T) or false (F)
The International Maritime Bureau said the waters off Somalia are the world's most dangerous, accounting for nearly a third reported pirate attacks worldwide. Suppose all boats are insured to $100,000 and pay a premium of $15,000 each
Suppose 10 out of 100 boats are attacked by pirates and these 10 file claims with their insurance. Has the insurance company earned an economic profit? A) Yes, they earned an economic profit of $500,000. B) Yes, they earned an economic profit of $50,000. C) No, they sustained an economic loss of $85,000. D) No, they broke even.
Refer to the above figures. A unit tax of $2 has been levied on a good. Which of the panels depict the effect of the taxes?
A) Panel 1 B) Panel 2 C) Panel 3 D) None of the diagrams reflect the effect of the tax.
The Koyck distributed lag model is an example of:
A. a moving average model. B. an autoregressive conditional heteroskedasticity model. C. an infinite distributed lag model. D. a finite distributed lag model.