A bond with no expiration has an original price of $10,000 and a fixed annual interest payment of $1,000. If the price of this bond increases by $2,500, the interest rate in effect will
A. decrease by 1 percentage point.
B. increase by 1 percentage point.
C. increase by 2 percentage points.
D. decrease by 2 percentage points.
Answer: D
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Which of the following assumptions is true of government spending and taxes?
a. They do not depend upon on the level of GDP b. They may be changed only through direct action by the Congress. c. They change only when the price level changes. d. They change only upon executive order by the president of the United States. e. They are autonomous at low levels of GDP but not at higher levels of GDP.
Consider the production possibilities frontier displayed in the figure shown. Which of the following statements is true? The opportunity cost of one watermelon:
A. will decrease as more watermelons are produced.
B. is constant.
C. will increase as more watermelons are produced.
D. is zero at point C.