The opportunity cost of holding money refers to
A) the service fees associated with checking accounts.
B) the service fees associated with checking accounts plus the costs undertaken to prevent theft.
C) the interest that could have been earned if the money balances had been transferred to an interest-bearing asset.
D) the pleasure that would have been received if the money balances had been used to buy a good or service.
C
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In the traditional Keynesian model, if the government cuts taxes, then
A) both consumption and real Gross Domestic Product (GDP) will increase. B) both consumption and real Gross Domestic Product (GDP) will decrease. C) consumption will increase but Gross Domestic Product (GDP) will decrease. D) consumption will decrease but Gross Domestic Product (GDP) will increase.
Which of the following is a definition of value added? Revenue received by a firm for its output
a. minus the cost of all the final goods bought b. plus the cost of all the intermediate goods bought c. minus the cost of all the intermediate goods bought d. minus the cost of all interest payments e. plus the cost of all the final goods bought
Fiscal policy designed to increase aggregate demand during economic downturns and decrease aggregate demand during economic booms is called
a. business cycle fiscal policy. b. new classical fiscal policy. c. supply-side fiscal policy. d. countercyclical fiscal policy.
Kate and Ali can live together in a two-bedroom apartment for $600 per month, or they can each rent a one-bedroom apartment for $400 per month. Apart from the rent, they are indifferent between living together and living apart, except for one problem: Kate hates Ali's taste in music. Kate would be willing to pay up to $100 a month to avoid hearing Ali's music. Ali would give up listening to her music for no less than $300 per month. If Kate and Ali decide to live together, is it socially optimal for Ali to play her music in the apartment?
A. Yes, because the benefit to Ali of listening to her music is greater than the cost to Kate. B. Yes, because the benefit to Ali of listening to her music is less than the cost to Kate. C. No, because the benefit to Ali of listening to her music is less than the cost to Kate. D. No, because the benefit to Ali of listening to her music is greater than the cost to Kate.