Explain why "good news for the economy is bad news for bond prices."
What will be an ideal response?
When real GDP increases, the demand for money will increase. The increased demand for money will increase interest rates. Since bond prices move in the opposite direction from interest rates, when interest rates increase, as they do when the real GDP is growing, bond prices will decrease.
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Waldo buys only two items, pretzels and ham sandwiches. Waldo has $24 in income, pretzels cost $0.60 per bag and ham sandwiches cost $2.40 each
If Waldo's budget line is constructed with ham sandwiches along the horizontal axis and bags of pretzels along the vertical axis, then A) the horizontal intercept of the budget line will be 40 ham sandwiches. B) the vertical intercept of the budget line will be 10 bags of pretzels. C) the slope of the budget line will be -4 bags of pretzels per ham sandwich. D) All of the above answers are correct.
How does the principle of minimum differentiation relate to the free-rider problem?
What will be an ideal response?