Economics Principles MCQ

1. What does actual rate of return measure?

Answer

Correct Answer: Total rate of return, including capital gains and interest paid on an investment

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2. What is an adjustable-rate mortgage?

Answer

Correct Answer: A loan a borrower uses to purchase a home in which the interest rate varies with market interest rates

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3. What is the definition of acquisition?

Answer

Correct Answer: When one firm purchases another

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4. What is accounting profit?

Answer

Correct Answer: Total revenues minus explicit costs, including depreciation acquisition

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5. What is the definition of adverse selection?

Answer

Correct Answer: When groups with inherently higher risks than the average person seek out insurance, thus straining the insurance system.

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