Refer to Scenario 15.4. The net present value of the purchase is
A) $200 × 10 - $800.
B) $200/1.06 - $800.
C) $200/1.0610 - $800.
D) $200 × (1 + 1/1.06 + 1/1.062 + ... + 1/1.069 ) - $800.
E) $200 / (1 + 1/1.06 + 1/1.062 + ... + 1/1.069 ) - $800.
D
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If the consumption function is C = 20 + 0.8YD, then an increase in disposable income by $100 will result in an increase in consumer expenditure by
A) $58. B) $64. C) $80. D) $100.
If the government increases taxes while holding expenditures constant,
A) the bond supply curve will shift to the left and the equilibrium interest rate will fall. B) the bond supply curve will shift to the right and the real interest rate will fall. C) government borrowing will be increased. D) the government's deficit will increase.
A price floor would be established in cases where the government believed the market equilibrium price would:
a. result in a surplus. b. be too high. c. result in a shortage. d. be too low. e. yield excess profits.
Examples of Fed actions that could decrease money supply are making open market
a. purchases, increasing the required reserve ratio, and increasing the discount rate b. sales, decreasing the required reserve ratio, and increasing the discount rate c. sales, increasing the required reserve ratio, and decreasing the discount rate d. sales, increasing the required reserve ratio, and increasing the discount rate e. purchases, decreasing the required reserve ratio, and decreasing the discount rate