Babe Ruth, the famous baseball player, earned $80,000 in 1931 . Today, the best baseball players can earn more than 400 times as much as Babe Ruth earned in 1931 . However, prices have also risen since 1931 . We can conclude that
a. the best baseball players today are about 400 times better off than Babe Ruth was in 1931.
b. because prices have also risen, the standard of living of baseball stars hasn't changed since 1931.
c. one cannot make judgments about changes in the standard of living based on changes in prices and changes in incomes.
d. one cannot determine whether baseball stars today enjoy a higher standard of living than Babe Ruth did in 1931 without additional information regarding increases in prices since 1931.
d
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Under a system of fixed exchange rates, what happens if a country's currency is overvalued?
A) The central bank loses official reserve assets. B) The central bank gains official reserve assets. C) The currency appreciates. D) The exchange rate rises.
Suppose the interest rate is 10 percent. Which of the following payments has the largest present value?
a. You receive $90.91 two years from today. b. You receive $82.64 one year from today. c. You receive $75.13 today. d. All of these payments have the same present value to the nearest cent.