If Table 12.2 represents all the investments available to the economy, the nominal interest rate is 10 percent and there is no inflation, what will be the level of investment in the economy?

David sells Sno-cones and uses the money earned to buy pizzas. Last year Sno-cones sold for $1 each, and pizzas were $10 each. This year David finds that he can only charge $0.50 per Sno-cone, but that the price of a pizza has climbed to $12. a . If

David asks the government to intervene to maintain his purchasing power, what price would the government have to set for Sno-cones? Explain. b. How would the new, government-imposed Sno-cone price affect the Sno-cone market?

Answer the following statement true (T) or false (F)

1) Other things equal, the shorter the loan period and the larger the loan size, the higher is the interest rate charged by the lender. 2) The supply of loanable funds is perfectly elastic. 3) Economic profits are the salaries received by the hired managers of business corporations. 4) The basic function of profits and losses is to allocate society's scarce resources to their highest valued uses. 5) Broadly defined, labor's share of national income has been remarkably stable since 1900.