What would be the price of a perpetuity bond that has a $100 interest payment and a 4% yield?
a) $1,000
b) $2,000
c) $2,500
d) $4,000
Ans: c) $2,500
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Tobin's model of the speculative demand for money shows that people hold money as a store of wealth as a way of
A) reducing risk. B) reducing income. C) avoiding taxes. D) reducing transactions cost.
Suppose that an economy produces food and clothing, and a technological innovation occurs that enhances the productivity of resources used in producing both goods. Which of the following would be consistent with this situation?
a. There is a parallel outward shift of the PPF. b. The PPF rotates outward along the food axis, and remains fixed at the point of maximum clothing production. c. The PPF rotates outward along the clothing axis, and remains fixed at the point of maximum food production. d. There is a parallel inward shift of the PPF.