Refer to the above figure. If real disposable income is less than $5,000, then saving is
A) negative.
B) 0.
C) positive.
D) none of the above: cannot be determined with the given information.
A
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If participants in securities markets believe that an announced decrease in the money supply will reduce the rate of inflation, the likely result will be
A) higher real interest rates. B) higher nominal interest rates. C) lower real interest rates. D) lower nominal interest rates.
Discontinuing a Missile Program Merowak Missiles has developed its Democratizer Offensive Weapon System (DOWS) for the US military. After sinking $1 billion into R&D and design, it spent $0.5 billion building the tools and production facility that are
unique to DOWS production. It houses these in standard factory floor space that costs $1 million. Each missile has a marginal cost of $2,000 . The Pentagon is thinking of discontinuing the program because the missiles are too expensive. If Merowak were to get an order for 50,000 missiles, what would its breakeven price be?