Rick Recently Purchased a Convenience Store for $500,000

question 66

Multiple Choice

Rick recently purchased a convenience store for $500,000. He expects monthly profits to be $10,000 in the next year. If a recession had struck, and Rick had instead paid $300,000 while his monthly profits was reduced to $6,000, his expected rate of return would have:

• A) Increased by 2 percentage points
• B) Increased by 3 percentage points
• C) Decreased by 2 percentage points
• D) Remained the same

Recognize the effects of market economies on resource conservation and innovation.

Understand how government policies and economic incentives can influence energy efficiency and the transition to alternative energy sources.

Grasp how global economic expansion affects natural resource demand and supply.

Identify the impact of consumer behavior shifts in response to changes in resource prices.

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Definitions:

Government Spending

The total of all public expenditures made by government agencies, including investments and consumption.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid to lenders over a specified period.

Government Failure

Occurs when government intervention in the economy causes an inefficient allocation of resources and leads to a net loss of economic welfare.

Special-interest Effect

The impact of a small, organized group on political or economic decisions, often in a way that benefits the group at the expense of the general public.