Author Question: If a firm wants to borrow 10 million and the real interest rate increases from 5 percent to 6 ... (Read 114 times)

xroflmao · **on:** Jun 29, 2018

If a firm wants to borrow 10 million and the real interest rate increases from 5 percent to 6 percent, then the cost of the investment has increased by

A) 6 million per year.
B) 100,000 per year.
C) 1 million per year.
D) 600,000 per year.
E) nothing because the real interest rate is the return the firm will earn on its investment.

Question 2

To achieve gains from trade, a country

A) needs to have an absolute advantage in the production of all goods.
B) specializes in the producing a good in which it has a lower opportunity cost.
C) must produce at a point beyond its PPF.
D) needs to have an absolute advantage in the production of at least one good.
E) should produce at the midpoint of its PPF.