A bank seeks a 4% real return on its loans and predicts a 4% annual rate of inflation. It should therefore charge a nominal interest rate of
A) 0%.
B) 1%.
C) 4%.
D) 8%.
E) 12%.
Ans: D) 8%.
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Which of the following would most likely increase the price of automobiles?
a. a decrease in the price of steel used to produce automobiles b. an increase in the price of gasoline c. a decrease in consumer income d. the United Auto Workers union obtaining a substantial wage increase for auto workers
When a monopolist charges a low price to drive out competition, then charges a high price, the monopolist is engaging in:
A. a trust agreement. B. a merger. C. duopoly pricing. D. predatory pricing.
In the economic way of thinking, the right to coerce adults is
A) immoral. B) a property right. C) the most efficient way for management to control labor. D) necessarily antithetical to a free and open society. E) good because it's rooted in the Old Testament.
If the marginal propensity to consume was 0.75, it would mean that:
A. $0.25 of an additional $1 of individuals' after-tax income is spent on consumption. B. $0.75 of an additional $1 of individuals' after-tax income is spent on consumption. C. $0.75 of an additional $1 of individuals' after-tax income is saved. D. None of these is true.