Present value is
A. the nominal value instead of the real value of something.
B. the value of a dollar received a year from now, expressed in terms of its future value.
C. the inverse of the interest rate.
D. the value of a future amount expressed in today's dollars.
Answer: D
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Lipitor, a heart medication with few substitutes, should have an own-price elasticity of demand that is:
a. Relative elastic b. Relatively inelastic c. Perfectly inelastic d. Perfectly elastic
When someone stops mowing his own lawn and hires a lawn service to mow it for him, what happens to GDP? (Assume that the lawn service reports its income to the IRS.)
A. It falls because hiring a lawn service reduced the amount of other goods that the person could purchase. B. It rises because GDP includes the value of the additional leisure time that the person gets by hiring someone else. C. Nothing; the same lawns are being mowed, so production has not changed. D. It rises because when the person used to mow his own lawn it was a nonmarket production, which is not counted, but the hiring of the lawn service is counted in the GDP.
For endangered species, the federal government
A. has the right to regulate activities on private land to save the species from extinction. B. will capture a pair of animals so that the species does not become extinct. C. can only protect the animal on federal property because of common property issues. D. turns over the protection of an endangered species to the state authorities where the species lives.
When the economy goes into a recession and firms require less labor, managers tend to:
A. Reduce wages, to reflect the lower demand for labor B. Avoid cutting wages, for fear of drops in worker-productivity C. Lay off workers, and keep wages of remaining workers constant D. Keep all of their workers, by spreading work more thinly