Refer to Table 9-3. If the required reserve ratio is 10% and the market interest rate is 6%, then the opportunity cost of holding excess reserves is
A) zero since Alpha-Beta does not hold any excess reserves.
B) $0.9 million.
C) $2.4 million.
D) $4 million.
Ans: C) $2.4 million.
You might also like to view...
The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that
a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources. b. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits. c. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits. d. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.
If net taxes paid by households increase:
A. transfer payments to households will decrease. B. private saving will decrease. C. private saving will increase. D. public saving will decrease.
Jose goes to an all-you-can-eat buffet at a Chinese restaurant and consumes three plates of food. He does not go back for a fourth plate of food because
A. The marginal utility of the fourth plate would no longer be positive. B. The price of the fourth plate is too high. C. He has reached the point of increasing marginal utility. D. His total utility would increase with the fourth plate of food.
Seignorage is the revenue a government raises by
A. borrowing money. B. taxation. C. charging fees for services. D. printing money.