A difference between the market and the public sector is that
A. government can use force, while the market does not.
B. we can only vote in the public sector.
C. scarcity exists only in the market sector.
D. the cost of private goods to society is zero.
Answer: A
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Suppose an individual has $45,000 in annual income and considering a home that they intend to finance with a $150,000 mortgage at 4% APR 30-year fixed rate loan, the real estate taxes and insurance are $2,000 per year, auto payments are $350/month, and student loans payments are $400/month.
(1) Calculate the two qualification ratios. (2) Would this individual qualify for this loan using a standard 28/36 ratio criteria? Show all work for credit.
According to the economic way of thinking, it is efficient to support a system of law and order through taxation because
A) we need law and order. B) law and order are not free goods. C) law and order create significant spillover benefits. D) citizens ultimately despise law and order.
Net foreign investment minus net foreign portfolio investment is equal to
A) the balance of trade. B) net foreign financial investment. C) net foreign direct investment. D) capital outflows.
Which of the following statements is NOT true about exchanges in the market system?
A) In voluntary exchange both parties are better off because of the exchange. B) Exchanges occur only in situations of barter where the market price is irrelevant. C) Prices indicate what is relatively abundant and what is relatively scarce. D) Transaction costs in exchanges include the cost of enforcing a contract as well as the costs of information.