Compounding:
A. is beneficial to borrowers, but costly to savers.
B. is beneficial to savers, but costly to borrowers.
C. is costly to both borrowers and savers.
D. is beneficial to borrowers and savers alike.
Answer: B
You might also like to view...
For an individual who consumes only two goods, X and Y, the opportunity cost of consuming one unit of X in terms of how much Y must be given up is reflected in
a. the individual's marginal rate of substitution. b. the slope of the individual's budget constraint. c. the slope of the individual's indifference curve. d. None of the above.
Accelerated depreciation laws may increase firms' investment in equipment because
a. machines will wear out more rapidly. b. profits will be increased. c. the rental rate on capital will be lowered. d. the price of machines will fall.
Under the rational expectations hypothesis, which of the following is the most likely short-run effect of a move to expansionary monetary policy?
a. A higher general level of prices but no change in real output b. A higher general level of prices and an expansion in real output c. No change in the general level of prices and a reduction in real output d. No change in either the general level of prices or real output
Suppose that more British decide to vacation in the U.S. and that the British purchase more U.S. Treasury bonds. Ignoring how payments are made for these purchases,
a. the first action by itself raises U.S. net exports, the second action by itself raises U.S. net capital outflow. b. the first action by itself raises U.S. net exports, the second action by itself lowers U.S. net capital outflow. c. the first action by itself lowers U.S. net exports, the second action by itself raises U.S. net capital outflow. d. the first action by itself lowers U.S. net exports, the second action by itself lowers U.S. net capital outflow.