If a motorist is stranded in front of a pay phone and has only dollar bills, and he ends up buying a quarter from a passerby for $1,
a. the stranded motorist must not understand that four quarters are worth $1.
b. economic theory is unable to explain this transaction.
c. both parties have gained from this exchange.
d. the passerby was made better off and the motorist worse off.
C
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Which of the following is considered by economists to be the most fundamentally scarce?
A. Money B. Ideas C. Needs D. Food E. Physical resources
The Banks of the Mississippi has excess reserves of $20,000, desired reserves of $80,000 and the desired reserve ratio is 5 percent. What is the total amount of deposits in this bank?
A) $180,000 B) $100,000 C) $1,000,000 D) $1,600,000 E) $5,000
The interest rate on seasonal credit equals
A) the federal funds rate. B) the primary credit rate. C) the secondary credit rate. D) an average of the federal funds rate and rates on certificates of deposits.
Which of the following statements is NOT true of external benefits?
A) External benefits lead to an underallocation of resources to the production of the good that has the external benefit. B) External benefits lead to a price in the market that is too high. C) External benefits lead to too few of the goods that have the external benefit being produced. D) External benefits are a good thing for the allocation of resources because people are getting something at no cost.