A family has decided to go away for the summer. The monthly mortgage payment on the family's house is $1,000 . Water, electricity, natural gas, and maintenance bills, to be paid by the family, will be $700 per month if the house is occupied and zero otherwise. If the family wishes to minimize losses from being away, it should rent the house for as much as the market will bear, as long as the
monthly rent is above which of the following? (Assume wear and tear to be the same whether or not the house is occupied.)
a. $300
b. $700
c. $1,000
d. $1,700
B
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Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same. c. The GDP Price Index and reserve-related (central bank) transactions remain the same. d. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Suppose X and Y are complements and demand for X is Qxd = ?0 + ?XPX + ?YPY + ?MM + ?HH. Then we know
A. ?H > 0. B. ?M < 0. C. ?Y < 0. D. ?X > 0.
If the nominal money supply grows 10%, the inflation rate is 6%, and the income elasticity of money demand is 1.0, then real income growth equals
A. 1%. B. 2%. C. 3%. D. 4%.
Because of easy entry, monopolistically competitive firms will
a. produce at the lowest average total cost b. charge a price equal to marginal cost c. earn no economic profit in the long run d. take advantage of all economies of scale e. earn no economic profit in the short run