Describe briefly how the final value of an iPhone which costs $700 must be equal to the sum of incomes generated by the production of the iPhone
What will be an ideal response?
Consider the value of an iPhone which costs $700. Part of the $700 goes to Apple in the form of profit. Part of the $700 goes to the firms that sold Apple the parts that made up the iPhone. Part of the $700 goes to the workers that built the iPhone. A portion of the $700 goes to pay the sales clerk who sells the iPhone. Part of the $700 goes to the trucking company that shipped the iPhone. In fact, all of the value of the $700 ends up as income for someone in the economy. If we extend this idea to the entire economy and add up the value of all goods and services, then the total will equal the total amount of income in the economy.
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Exhibit 36-1 Bond FaceValueof Bond Price ofthe Bond Annual CouponPayment A $1,000 $850 $25 B $1,000 $950 $41 C $1,000 $1,100 $52 D $1,000 $1,100 $32 E $1,000 $1,000 $50 Refer to Exhibit 36-1. For which bond is the yield and the coupon rate the same?
A. Bond A B. Bond B C. Bond C D. Bond D E. Bond E
Banks decide to raise the interest rate they pay on checking accounts from 1% to 2%. This action would
A) increase money demand, shifting the LM curve up and to the left. B) increase money demand, shifting the LM curve down and to the right. C) decrease money demand, shifting the LM curve up and to the left. D) decrease money demand, shifting the LM curve down and to the right.
To maximize profits, the monopolist should produce at which
A) MR = MC. B) MC intersects the demand curve. C) total revenue is maximized. D) total costs are minimized.
If a country is in a major recessionary phase of the business cycle, one can expect that its currency will
a. revalue. b. devalue. c. appreciate. d. depreciate.