The following table shows Jay's estimated annual benefits of holding different amounts of money.Average money holdingsTotal benefit$100$20$200$29$300$36$400$41$500$44 How much money will Jay hold if the nominal interest rate is 8 percent? (Assume he wants his money holdings to be in multiples of $100.)
A. $100
B. $300
C. $200
D. $400
Answer: C
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An option allowing the holder to buy an asset in the future is a
A) put option. B) call option. C) swap. D) forward contract.
One reason why an economy may not smoothly adjust to a macroeconomic shock is that
A) prices are flexible in the long run. B) prices are sticky in the short run. C) wages are sticky in the long run. D) prices and wages are sticky in the long run.
A set of indifference curves that are only slightly bowed inward represent goods that could best be described as
a. perfect substitutes. b. perfect complements. c. very close substitutes. d. very close complements.
How are Treasury bond prices affected when the interest rate falls?
A. The purchaser of the bond needs to spend less money to obtain a given number of dollars of interest per year, so the price of the bond must decrease. B. The purchaser of the bond needs to spend more money to obtain a given number of dollars of interest per year, so the price of the bond must increase. C. The purchaser of the bond needs to spend more money to obtain a given number of dollars of interest per year, so the price of the bond must decrease. D. The purchaser of the bond needs to spend less money to obtain a given number of dollars of interest per year, so the price of the bond must increase.