The opportunity cost of holding excess reserves is equal to
A. the federal funds rate.
B. the federal funds rate minus the discount rate.
C. the discount rate.
D. none of the above.
Answer: D. none of the above.
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Which of the following is TRUE?
A) MPC + MPS = 1 B) MPC * MPS = 1 C) MPC - MPS = 1 D) MPC / MPS = 1
Refer to the figure above. When the demand curve for flash drives is D and the supply curve of flash drives is S1, the equilibrium price is:
A) $3. B) $4. C) $5. D) $7.
Long Beach Island, off the coast of New Jersey, is considering building a sand barrier to protect the houses on the island from future hurricanes. The marginal social benefit of the barrier is equal to the
A) marginal private benefit of the person who benefits the most from the barrier. B) marginal private benefit of the person who benefits the least from the barrier. C) sum of the marginal private benefits for anyone who benefits from the barrier. D) difference between the marginal private benefit of the person who benefits the most and the person who benefits the least from the barrier.