If interest rates are positive, one dollar today is worth
A. nothing.
B. more than a dollar a year from now.
C. the same as a dollar a year from now.
D. less than a dollar a year from now.
Answer: B
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An equal decrease in all bond interest rates
A) increases the price of a five-year bond more than the price of a ten-year bond. B) increases the price of a ten-year bond more than the price of a five-year bond. C) decreases the price of a five-year bond more than the price of a ten-year bond. D) decreases the price of a ten-year bond more than the price of a five-year bond.
The ebbs and flows of the economy over time is called the
A) yield curve. B) business cycle. C) competitive market process. D) CAPM.
The No Marginal Improvement Principle tells us that, at the best choice:
A. the marginal benefit of the last unit must be at least as large as the marginal cost and the marginal benefit of the next unit must be no greater than the marginal cost. B. marginal cost and marginal benefit of the last unit must always be equal. C. the marginal benefit of the last unit must be at least as large as the marginal cost and the marginal benefit of the next unit must be greater than the marginal cost. D. small changes in the level of an activity will always increase net benefit.
Many people fall victim to the gambler’s fallacy, even when they’re not gambling. Which of the following is an example of such a situation?
a. waiting to purchase a car until a dealership holds its annual year-end sale b. buying a puppy of the same breed as the dog you had growing up because you liked your childhood dog so much c. expecting that a couple will have a baby boy next because all their other children are girls d. driving cautiously because you have a perfect driving record that you want to maintain