1.
Which of the formulas below correctly describes the relationship between Present Value (PV), Future
Value (FV), and the period rate of time discount or interest rate (r), where the present and future
values are N periods apart:
a)
i = [PV/FV]
1/N
1
b)
FV=PV/(1+r)
N
c)
FV= PV(1+r)
N
d)
i = [FV/PV]
N
 1
2.
10,000 career women decide to quit their jobs and become full time “stay at home” Moms.
This
would cause the unemployment rate to _______ and the labor force participation rate to ________.
3.
An increase in unemployment benefits will:
4.
Longterm bonds are generally ______ risky than shortterm bonds and so pay _____ interest.
5.
The present value of expected future earnings of Acme Corporation is greater than the value of all
outstanding shares of Acme stock.
Acme’s stock is __________, which means traders will
consider _______ it.
a)
overvalued; buying
c) overvalued; selling
b)
undervalued; selling
d) undervalued; buying
6.
Following an improvement in technology we would expect a _________
increase in the rate of
growth of aggregate output and a _________ in the level of percapita income.
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 Spring '08
 RobertHoland
 Monetary Policy, .........

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