Which of the following characteristics is NOT likely to increase the interest on a loan?
A. a non-creditworthy borrower
B. a short-term loan
C. a larger dollar loan
D. a high-risk proposal
Answer: B
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The present discounted value of a future payment will decrease when interest rates decrease.
Answer the following statement true (T) or false (F)
In general, financial assets that have a(n) ________ amount of risk have a ________ rate of return.
A. lower; higher B. equal; higher C. higher; lower D. higher; higher
Suppose that consumers become more pessimistic about the future and, as a result, reduce their consumption by $10 billion. If the marginal propensity to consume is 0.80, how will this $10 billion reduction in consumption affect the equilibrium level of real GDP?
A. Real GDP will decrease by $8 billion. B. Real GDP will decrease by $10 billion. C. Real GDP will decrease by $40 billion. D. Real GDP will decrease by $50 billion.
The consumer optimum (for two goods, A and B) is reached when
A) TUA = TUB. B) MUA = MUB. C) TUA/PA = TUB/PB. D) MUA/PA = MUB/PB.