The opportunity cost of capital is
A. the rate of return that could be earned by the owner's capital were it used elsewhere.
B. the rate of interest the government uses to calculate legal business tax penalties.
C. the rate of return realized on an investment.
D. the rate used to calculate a firm's tax liability.
Answer: A
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How are TIPS adjusted for inflation?
A) The interest rate is adjusted for inflation during each period. B) The principal is adjusted once the bond reaches maturity. C) The principal is adjusted for inflation each period. D) The interest rate is adjusted once the bond reaches maturity.
Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per unit prices of these three goods are A = $2, B = $3, and C = $1. Refer to the above information. If the per unit prices of the three goods each were $1 in a base year used to construct a GDP price index, then real GDP in the current year is:
a) $110. b) $115. c) $45. d) $160.
When the absolute price elasticity of demand is less than 1, demand is
A. elastic. B. unit-elastic. C. inelastic. D. undetermined without more information.
Assume that a firm has $100 million in real assets and $90 in real liabilities. The value of its net worth would be ________
A) a negative $10 million. B) $190 million. C) $4190 billion. D) $10 million.