The opportunity cost of funds is the interest that can be earned by lending the funds
Indicate whether the statement is true or false
TRUE
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If the United States imports goods and services for a total of $45 billion, exports goods and services for a total of $40 billion, records $4 billion as net interest and zero as net transfers, then the U.S. current account balance is
A) $1 billion. B) -$1 billion. C) $89 billion. D) zero. E) $81 billion.
In the long run,
a. the government's tax policies do not affect the rate of investment spending. b. lower tax rates will have no effect on the average standard of living. c. lower tax rates will lead to faster growth in the average standard of living. d. higher tax rates will lead to slower growth in the average standard of living. e. the debt and the deficit will converge to zero.
Which of the following undermines the effectiveness of a barrier to entry?
a. the existence of patents in the industry b. high fixed cost c. no access to resources d. product differentiation e. rapid technological innovation
Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college. How would an economist look at the matter?
A. There is no opportunity cost, assuming that future earnings actually increase as expected. B. The opportunity cost is much less than it would appear, assuming that earnings increase. C. Opportunity cost is a meaningless concept in this situation. D. The college students are completely correct in all respects. E. There is still an opportunity cost, even if it is justified by higher future earnings.