The primary economic function of financial intermediaries is to help allocate scarce resources to desired uses.
Answer the following statement true (T) or false (F)
True
The central economic function of financial markets is to channel savings into new investment and other desired expenditures.
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If the Fed wants to increase the money supply, it can:
A. pass a law that interest rates rise. B. buy bonds. C. pass a law that interest rates fall. D. sell bonds.
When decisions are guided strictly by short-run gains, this is known as
A) opportunistic behavior. B) the prisoners' dilemma. C) tit-for-tat strategy. D) a positive-sum game.
An increase in the price of labor used to produce good Y will lead to
A) an increase in the market clearing price of good Y. B) an increase in the supply of good Y. C) a decrease in the demand for good Y. D) an increase in the demand for good Y.
Jody has purchased a non-refundable $75 ticket to attend a Miley Cyrus concert on Friday night. Subsequently, she is asked to go to out dinner at no expense to her. If she uses cost-benefit analysis to choose between going to the concert and going out to dinner, the opportunity cost of going out to dinner should include:
A. neither the cost of the ticket nor the entertainment value of the concert. B. the cost of the ticket plus the entertainment value of the concert. C. only the cost of concert ticket. D. only the entertainment value of the concert.