Suppose you had $1,000 to spend. You choose to spend the money on new clothes rather than on a new surfboard, your second choice or 1,000 lottery tickets, your third choice.
A. Your opportunity cost of spending the money on clothes is the $1,000 spent.
B. Your opportunity cost of spending the money on clothes is not buying the surfboard.
C. Your opportunity cost of spending the money on clothes is not buying the surfboard and the lottery tickets.
D. There is no opportunity cost in this instance.
B. Your opportunity cost of spending the money on clothes is not buying the surfboard.
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All else equal, if autonomous consumption ________, the value of the multiplier remains constant
A) increases B) decreases C) remains constant D) all of the above
In the long run ________
A) the amount of output an economy can produce is determined by real variables like capital, labor and technological advances B) aggregate supply is fixed at the potential level of output C) there is enough time for prices to fully adjust so the classical dichotomy holds D) all of the above E) none of the above
In a simplified banking system in which all banks are subject to a 10 percent required reserve ratio, a $1,000 open market sale by the Fed to a bank would cause the money supply to:
a. increase by $1,000. b. increase by $100,000. c. decrease by $10,000. d. decrease by $1,000. e. remain unchanged.
You are asked to lend a friend $20,000 for a year. At the end of the year your friend agrees to pay you $21,000. The interest rate on this loan is
A. 4.50% B. 5.00%. C. 5.50%. D. indeterminate from this information.