Your firm is evaluating a potential investment in new machinery, but the manager in charge of the project uses an opportunity cost of capital that is too large. How does this error affect the projected net present value of the firm's investment?
A) NPV is overstated
B) NPV is understated
C) NPV is unaffected
D) NPV changes from positive to negative
B
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Which of these transactions results in an increase in M1?
A) withdrawal of $100 cash from your checking account B) certificate of deposit matures, adding $520 to your checking account C) depositing a bank loan of $400 into your savings account D) depositing a $300 paycheck into your savings account E) none of the above
All of the following are characteristics of public goods EXCEPT
A) Public goods can be used by more people at no additional cost. B) The good can be consumed by everyone at the same time without reducing what is available for anyone else. C) the exclusion principle D) The goods are perfectly divisible.
An important prerequisite for the price system to work is an economy-wide respect for _______ rights
Fill in the blank(s) with correct word
For a fixed target real interest rate and target inflation rate, when inflation decreases, the Fed ________ interest rates, hence ________ short-run equilibrium output.
A. increases; increasing B. decreases; decreasing C. increases; decreasing D. decreases; increasing