You have won a lottery prize that promises to pay you and your descendants $1,000 a year forever. If the lowest price you are willing to sell this perpetuity for is $20,000, then you must be assuming that the relevant interest rate is
a. 5%
b. 10%
c. 15%
d. 20%
a. 5%
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The cross-elasticity of demand between Homer's Holesome Doughnuts and Krusty's Krispy Crullers is 5.0, which indicates that Homer's doughnuts and Krusty's crullers are
A) complements and the relationship between the two goods is strong (that is, the quantity demanded of doughnuts is very responsive to changes in the price of crullers). B) complements and the relationship between the two goods is weak (that is, the quantity demanded of doughnuts is not very responsive to changes in the price of crullers). C) substitutes and the relationship between the two goods is strong (that is, the quantity demanded of doughnuts is very responsive to changes in the price of crullers). D) substitutes and the relationship between the two goods is weak (that is, the quantity demanded of doughnuts is not very responsive to changes in the price of crullers).
When is it more expensive for a country to go to war – during a recession or during an economic boom? Explain
What will be an ideal response?
Today, central banks __________ intervene to influence floating exchange rates
A) never B) seldom C) frequently D) are required
When a tax is imposed, the surplus that is lost to buyers and sellers but converted into tax revenue is:
A. transferred to others through public programs. B. lost and considered a cost of taxation. C. part of deadweight loss. D. All of these statements are true.