You have 40,000 frequent flier miles. You could exchange your miles for a round trip ticket to Bermuda over spring break. Does that mean your flight to Bermuda would be free? Explain your reasoning
What will be an ideal response?
It does not. You could use your miles for other travel and so there is an opportunity cost if you use your miles to fly to Bermuda. Suppose, for example, you are definitely going to fly to Chicago when the spring semester is over. You could use your 40,000 miles to fly to Chicago or you could purchase a ticket for $300 . In this case, the opportunity cost of using your miles to fly to Bermuda is the $300 you will have to spend for the airfare to Chicago.
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When the interest rate rises, the demand for loanable funds falls and the supply of loanable funds rises.
Answer the following statement true (T) or false (F)
Which of the following does the U.S. currently have?
a. means-tested government benefits and tax laws that tax capital income only once b. means-tested government benefits and tax laws that tax some capital income twice c. tax laws that tax capital income only once, but not means-tested government benefits d. tax laws that tax some capital income twice, but not means-tested government benefits
Refer to Figure 7-22. Assume demand increases, which causes the equilibrium price to increase from $50 to $70. The increase in producer surplus would be
a. $2,500. b. $800. c. $1,600. d. $900.
Proponents of fixed exchange rates argue that the predictability of the fixed exchange rate:
A. decreases trade and economic integration. B. prevents exchange rate overvaluation. C. increases trade and economic integration. D. allows monetary policy to be used to stabilize the domestic economy.