A star basketball player signs a contract that newspaper reports say is worth $20 million. The player receives $5 million on signing, and $5 million a year for three years. The contract is worth
A) $20 million as reported in the papers.
B) less than $20 million since the present value of $5 million received one or more years from now is less than $5 million.
C) more than $20 million because the present value of $5 million received one or more years from now is more than $5 million.
D) either more or less than $20 million, depending on the value of the discount rate.
B
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If an overvalued currency is allowed to float:
A) its quantity demanded in exchange for the other currency will decrease. B) its quantity supplied in exchange for the other currency will increase. C) its value will depreciate. D) its value will appreciate.
The monetary base is $1,000 billion and the money multiplier is 5.5. What is the size of the money supply?
What will be an ideal response?
That part of national income not spent on consumption is defined as
a. transitory income b. permanent income c. disposable income d. autonomous consumption e. saving
Denmark is an importer of computer chips and adds a $5 per chip tariff to the world price of $12 per chip. Suppose Denmark removes the tariff. Which of the following outcomes is not possible?
a. More Danish-produced chips are sold in Denmark. b. More foreign-produced chips are sold in Denmark. c. Danish consumers of chips become better off. d. Total surplus in the Danish chip market increases.