If the three-month Treasury bill has an interest rate of 0.2%, the ten-tear Treasury bond has an interest rate of 2.75%, and a ten-year bond issued by Time Warner has an interest rate of 6%, what is the risk premium on Time Warner's bond?

If you were a borrower, which of the following unexpected changes in inflation would you prefer once you have taken out a long term fixed rate loan?

a. An increase from 2% inflation to 6% inflation. b. An increase from 7% inflation to 10% inflation. c. A decrease from 14% inflation to 8% inflation. d. A decrease from 6% inflation to 3%.

Ray buys a new tractor for $118,000 . He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

a. $13,000. b. $105,000. c. $118,000. d. $131,000.