Suppose that you open your own business and earn an accounting profit of $35,000 per year. When you started your business, you left a job that paid you a $30,000 salary annually. Also, suppose that you invested $70,000 of your own funds to start up your
business. If the normal rate of return on capital is 10 percent, your economic profit is
A) $5,000.
B) -$5,000.
C) $2,000.
D) -$2,000.
Answer: D
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A. are employed in the goods-producing sector. B. are employed by government. C. are employed in the service-producing sector. D. are employed in the agricultural sector.
A bank manager tells you that she doesn't create money. She just lends the money that people deposit. Explain why she's wrong
What will be an ideal response?
Between 1960 and 2010, the annual growth rate in percent per year was the highest in
A) China. B) United States. C) Brazil. D) Singapore. E) South Korea.
According to the real business cycle theory, an increase in energy prices will
A. increase real Gross Domestic Product (GDP) but not change the price level. B. decrease both real Gross Domestic Product (GDP) and the price level. C. decrease real Gross Domestic Product (GDP) but increase the price level. D. increase both real Gross Domestic Product (GDP) and the price level.