An investor who felt that the U.S. and world economies were about to improve, would be likely to
A) avoid investing in U.S. treasury bonds because interest rates would soon fall causing bond prices to rise.
B) avoid investing in U.S. treasury bonds because interest rates would soon rise causing bond prices to fall.
C) invest in U.S. treasury bonds because interest rates would soon fall causing bond prices to rise.
D) invest in U.S. treasury bonds because interest rates would soon rise causing bond prices to fall.
Ans: B) avoid investing in U.S. treasury bonds because interest rates would soon rise causing bond prices to fall.
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If the MPC is 0.6, and the government spends an additional $50b, the overall effect on GDP will be:
A. an increase of $250b. B. a decrease of $25b. C. a decrease of $75b. D. an increase of $125b.
Refer to the table below. Suppose all firms in this industry have identical costs to this firm and are producing 15 units of output. One can predict thatQuantityTotal RevenueExplicit CostsImplicit Costs1050365157563620100937251251258301501619
A. firms will attempt to lower their implicit costs. B. price must rise. C. new firms will enter the industry. D. old firms will exit the industry.