ECN 320 ECN320 Module 8 Homework Solution (AAU Online)

ECN 320 ECN320 Module 8 Homework Solution (AAU Online)

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PART I: SHORT RESPONSE

1.Would you consider becoming a payday lender?  List the reason why you would and why you would not.

2.As a financial officer of a large corporation, you find that the company has been underpaying the Internal Revenue Service by tens of millions of dollars a year. As a whistle blower, you will probably receive a payment of $10 million within a few years. If a large investor offers to pay you a substantial amount of money today in exchange for your future award from the IRS, what would be the minimum amount for which you would settle? Explain how you arrived at that figure.

3.Are prices high because rents are high, or are rents high because prices are high? Use an example to illustrate your answer.

4.What are usury laws? Why do economists hate them?

5.Explain why a dollar today is worth more than a dollar you will have in the future.

6.Why is the supply of loanable funds upward sloping? Why is the demand for loanable funds downward sloping?

7.Outline the main theories of profits.  Which one(s) do you subscribe to?

PART II: JOURNAL ACTIVITY


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