A client has $100,000 on deposit at year-end and owes the bank $250,000 on a note payable. The borrowing agreement calls for the client to maintain a minimum (compensating) balance of $40,000 on deposit during the life of the bank loan. On the balance sheet, the asset cash should be stated at $60,000, the excess of the deposit over the compensating balance.
a. true
b. false
Answer: b. false
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You purchase a bag of chocolate chips for $3, a bag of flour for $1, a bag of sugar for $.50, a half dozen eggs for $.50, and a half pound of butter for $2. You use all these ingredients to make three dozen cookies. Your roommate offers you $15 for them, and you happily accept. How much does this process contribute to GDP?
A. $8 B. $7 C. $22 D. $15
Markets can exist:
A. only if there are property rights. B. only if there is perfect information. C. with or without property rights. D. only if all goods are private.
What did the sound finance approach to fiscal policy use to support its view?
A. Keynesian economics B. A history of successful procyclical fiscal policy C. The Ricardian equivalence theorem D. The functional finance view
Refer to the diagram, representing Slippery Slope Oil Company. What price of oil would make 15 million barrels the optimal quantity to extract and sell this year?
A. $50.
B. $70.
C. $90.
D. $110.