1. You are considering an annuity which costs $55200 today. The annuity pays $6400 a year. The rate of return is 8 percent. What is the length of the annuity time period?
2. Suppose the Federal Reserve announces plans to buy back $85 billion of bonds. Assuming the announcement was not expected, what effect, other things held constant, would that have on bond prices and interest rates?
a. Prices and interest rates would both rise.
b. Prices would rise and interest rates would decline.
c. Prices and interest rates would both decline.
d. There would be no changes in price or interest rates.
e. Prices would decline and interest rates would rise.
3. Suppose that C&A produced $100 Million worth of outputs while inputs totaled $50 Million in year 1. For which of the following values in year 2 would productivity decrease?
A Outputs = $60 Million, inputs = $25 Million
B Outputs = $50 Million, inputs = $25 Million
C Outputs = $400 Million, inputs = $200 Million
D Outputs = $90 Million, inputs = $50 Million
E Outputs = $250 Million, inputs = $100 Million