Answer the following questions true (T) or false (F)
1. Your checking account balance is included in your bank's assets.
2. Consider the following T-account for a bank:
Assets Liabilities
Reserves $1,000 Deposits $5,000
Loans $4,000
If the required reserve ratio is 20 percent, the bank at this point can make no more loans.
3. Consider the following T-account for a bank:
Assets Liabilities
Reserves $1,000 Deposits $5,000
Loans $4,000
If the required reserve ratio is 10 percent, the bank at this point can make no more loans.
1. FALSE
2. TRUE
3. FALSE
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In most elections, _____ impedes political exchange
a. low transactions costs b. uncertainty c. the secret ballot d. special interests
Which of the following factors affecting decision-making is studied by Behavioral Game Theory?
A) psychological biases B) limited power of calculation C) weather forecast D) A and B are correct
Advocates of a progressive income tax use arguments EXCEPT for which of the following?
A) A progressive tax system taxes according to ability to pay. B) A progressive tax system taxes according to benefits received. C) A progressive tax system helps redistribute income away from the rich and towards the poor. D) A progressive tax system maximizes government revenues.
Fresh Flour makes baking flour and sells its flour in 4 pound sacks or bags. The managers of Fresh Flour are considering whether the firm should make or buy the flour sacks. To make the sacks, Fresh Flour needs a $500,000 piece of equipment. Using this equipment, Fresh Flour can make a flour sack for $0.01 and, for simplicity, ignore taxes and assume that the $0.01 cost includes depreciation and
all other costs. Fresh Flour would finance the $500,000 investment using its own funds and, if it purchased the flour sacks from another firm, it would pay $0.19 a flour sack. The life span of the equipment is 10 years and it has no salvage value at the end of the ten years. The discount rate is 6 percent. How many flour sacks does Fresh Flour need each year in order for the net present value to be positive? A) 259,666 B) 377,416 C) 352,589 D) 412,369