Suppose that John can buy a savings bond for $500 that matures in ten years and pays John $1,000 with certainty. He is indifferent between this bond and another $500 bond that has some risk but on which the interest rate is 5% higher. How much, to the nearest penny, does the riskier bond pay in ten years?
a. $1,275.91
b. $1,422.63
c. $1,577.69
d. $1,631.17
c
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The statement that a monopoly raises the price of its product is an example of positive economics
Indicate whether the statement is true or false
If an economy operates at a point within its production possibilities curve,
a. it lacks the resources necessary to reach the curve. b. it is utilizing all of its resources efficiently. c. it does not confront the problem of scarce goods relative to unlimited wants. d. it is not efficiently using all of its resources.
Which of the following examples shows a decrease in total revenue for an elastic price demand?
a. When the price of saws increases by 5 percent, the quantity demanded decreases by 9 percent. b. When the price of nails decreases by 10 percent, the quantity demanded increases by 15 percent. c. When the price of wrenches increases by 8 percent, the quantity demanded decreases by 5 percent. d. When the price of pliers decreases by 3 percent, the quantity demanded increases by 5 percent.
The money demand curve will shift to the right when which of the following occurs?
A) an increase in income B) a reduction in the interest rate C) an increase in the money supply D) all of the above E) none of the above