Financial intermediaries reduce search and information costs.
Answer the following statement true (T) or false (F)
True
With huge pools of amassed savings, financial intermediaries have the incentive to acquire and analyze information about lending and investment opportunities. Hence financial intermediaries reduce search and information costs in the financial markets. In so doing, they make the allocation of resources more efficient.
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Suppose your expenses for this term are as follows: tuition: $9,000, room and board: $1,500, books and other educational supplies: $1,000
Further, during the term, you can only work part-time and earn $3,000 instead of your full-time salary of $8,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A) $10,000 B) $13,000 C) $15,000 D) $18,000
During the American Revolution, the Pennsylvania legislature enacted price controls on essential commodities. The result of this legislation was
a. a large increase in the availability of those items, ending shortages. b. a severe shortage of those essential commodities. c. an increase in the price of those items, thus alleviating shortages. d. new efforts to increase production of those commodities. e. a minor inconvenience as persons adjusted to the new law.
The decision to go to graduate school is a rational one for a college student if the
A) cost is not too great. B) marginal cost exceeds the marginal benefit of graduate school. C) marginal benefit of graduate school exceeds the marginal cost. D) opportunity cost of graduate school equals zero. E) student carefully compared the social benefits of this decision.
In the above figure, assume the economy starts out in equilibrium at point d. If the Fed increases the money supply so that the new aggregate demand curve is AD3, then the new short-run equilibrium will be at point
A) a. B) b. C) c. D) i.