The lower the interest rate, i, the:
A. lower is the present value.
B. higher is the present value.
C. greater must be n.
D. higher is the future value.
Answer: B
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Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?
a. People respond to incentives. b. Rational people think at the margin. c. Trade can make everyone better off. d. Markets are usually a good way to organize economic activity.
Contractionary monetary policy causes
A) aggregate demand to rise and the price level to rise. B) aggregate demand to fall and the price level to fall. C) aggregate demand to rise and the price level to fall. D) aggregate demand to fall and the price level to rise.