Brian is paid monthly and typically takes $500 of his pay in cash to spend throughout the month, and the rest he leaves in an interest-bearing checking account. With the recent inflation, Brian finds it necessary to go to the bank every week, withdrawing $125 each time, so that his money can earn interest for as long as it can before Brian needs to withdraw it. The added hassle of going to the bank more often in response to inflation is called a:
A. shoe-leather cost.
B. menu cost.
C. transactions cost.
D. tax distortion.
A. shoe-leather cost.
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If the economy is on the LM curve, but is to the left of the IS curve, aggregate output will ________ and the interest rate will ________
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
What are the various ways that financial intermediaries can take advantage of economies of scale?
What will be an ideal response?
To an economist, scarcity means that:
a. it is very time-consuming to find a good. b. at a zero price, the available quantity of a good is insufficient to meet people's wants. c. a good is unavailable even at very high prices. d. at the current market price, the amount available is less than the amount that people want and are willing to pay for. e. resources are unlimited but people's desires are limited.
National income includes wages and salaries, interest and rent, but not corporate profits
a. True b. False Indicate whether the statement is true or false