According to the information in Scenario 15.5, if Catherine's life expectancy is 80 as a non-smoker and no inflation is expected to occur throughout her life (so that cigarettes stay at $2 per pack), then amount would she save by not buying cigarettes?
A) $4
B) $1460
C) $29,200
D) $87,600
E) $116,800
D
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According to the economy's self-correcting mechanism, how does the economy return to potential output following a negative demand shock? How is the recovery process different, if the government implements a policy of economic stimulus?
What will be an ideal response?
An example of fiscal policy occurs when the government decreases corporate income taxes.
Answer the following statement true (T) or false (F)
The rate of return on short-term U.S. government bonds is often referred to as the:
A. federal funds rate. B. discount rate. C. risk-free interest rate. D. yield rate.
If the required reserve ratio is 10% and the Fed purchases $20 million worth of securities, what is the simple deposit multiplier and what happens to the amount of deposits in the banking system? Assume that banks do not hold excess reserves and the
public does not change its currency holdings.