Suppose you have a choice between receiving a lump-sum payment of $10,000 today or four annual payments of $2,750 (with the first payment one year from today). Of the following, which is the lowest annual interest rate at which you would prefer the lump-sum payment over the four annual payments?
a. 2%
b. 5%
c. 7%
d. 10%
b
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Suppose a bank has a desired reserve requirement ratio of 12 percent. If someone deposits $1,000 in the bank
A) immediately after the deposit, excess reserves increase by $880. B) the bank can make loans of $1,000. C) the bank's desired reserves rise by $1,000. D) Both answers B and C are correct.
The marginal social cost is the cost of producing an additional unit of a good or service that falls on people other than the producer of the good or service
Indicate whether the statement is true or false
An example of a market subject to adverse selection would be:
A. the used car market. B. the insurance market. C. the financial market. D. All of these statements are true.
Economics employs a scientific methodology. In part, this means that
a. all economic laws have been proven true by laboratory tests b. there is a single economic theory accepted by all economists c. economic hypotheses are tested to determine their validity d. personal values never enter into economic policy recommendations e. assumptions are not necessary in economic science